Lombard Finance & Investments

Defendants

Sir Douglas Graham, Michael Reeves, William Jeffries and Lawrence Bryant.

Charges

The Commission alleges that Lombard Finance & Investments' offer documents and advertisements misled investors by misrepresenting the investment risks, especially in relation to liquidity, the quality of the loan book, adherence to credit policies and the company's overall financial position.

The Commission alleges that the directors made false statements in the registered prospectus dated 7 September 2007, as amended by a memorandum of amendments dated 24 December 2007, and investment statements dated 28 December 2007.  The documents stated the company's financial position had not materially and adversely changed since the company's last balance date and that the prospectus was not misleading by failing to properly refer to adverse circumstances.  However the Commission alleges this was false and the directors' statements misled investors.

In addition, the Commission alleges that a DVD advertisement distributed during 2007 and 2008 contained similar untrue statements about the financial position of the company. 

The Defendants deny the charges.

Penalties

Criminal charges - these charges are laid indictably under section 58 of the Securities Act and carry a maximum penalty of five years imprisonment or fines of up to $300,000 plus $10,000 for every day the offence is continued.

Civil proceedings - the proceedings are issued under section 55C and related sections of the Securities Act.  The Commission has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the five directors. 

Date filed

Criminal charges -14 April 2010 in the District Court at Wellington.

Civil proceedings -1 April 2010 in the High Court at Wellington.

Current status

Criminal charges - Committed for trial.  First callover at Wellington High Court 13 December 2010.

Civil proceedings - stayed pending resolution of the criminal case.