Commission planning to prosecute finance companies
The Securities Commission says that investigations into collapsed finance companies are progressing well and it is likely that proceedings will be laid against some companies.
Tuesday, May 6th 2008, 11:10PM
The Commission is working to establish whether there may be grounds to lay criminal charges or seek civil penalties under the Securities Act.
"It is important that people who raise money from the public are held to account if they mislead their investors. We will take court action if our investigations show this to be in the public interest and in the interests of investors."
The Commission can go to court to seek compensation for affected investors, for prospectuses registered after October 2006. It can also seek civil penalties in some circumstances. These actions can be taken against each director of the company, and any promoter of the offer.
The Commission's litigation fund will be topped up from the $17 million Tranz Rail settlement "providing significant resources to take actions."
Investors can also sue for compensation for loss caused by false or misleading statements.
The Commission is continuing to investigate whether there may be any prospects for compensation if investors' losses can be attributed to misleading statements or omissions in the prospectuses.
Diplock says that the Commission cannot protect people against genuine investment risk.
"However, some of these collapses raise serious questions as to whether directors were giving investors an accurate picture of their financial situation and the risks of investing with them, or even in some cases whether there was fraudulent behaviour."
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