Dominion Finance Group and North South Finance

Defendants

Vance Arkinstall, Richard Bettle, Terence Butler, Ann Butler, Paul Forsyth and Robert Barry Whale

Charges

The Commission alleges that Dominion Finance Group's offer documents and advertisements misled investors by misrepresenting the investment risks, especially in relation to related party transactions, lending standards, loan quality and impairment, liquidity and the company's overall financial position and that that North South Finance's offer documents and advertisements misled investors in relation to related party transactions, liquidity and the company's overall financial position."

The Commission alleges that the directors made false statements in the Dominion Finance Group registered prospectus dated 13 September 2007, as amended by an extension certificate 20 December 2007 and the North South Finance registered prospectus dated 11 September 2007, as amended by an extension certificate 20 December 2007. 

Each extension certificate stated that the relevant 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 that the directors' statements misled investors.

In addition, the Commission alleges that a quarterly newsletter of Dominion Finance Group and a letter to the investors of both Dominion Finance Group and North South Finance distributed during 2008 contained similar untrue statements about the financial position of the companies. 

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 directors. 

Date filed

Criminal charges - filed on 22 June 2010 in the District Court at Auckland.

Civil proceedings - filed on 4 June 2010 in the High Court at Auckland.  

Current status

Criminal charges - Committed for trial.  Next callover 18 March 2011 for trial date to be confirmed.

Civil proceedings - stayed pending resolution of the criminal case.