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Court dishes out sentence to Hotchin

Former Nathans Finance director John Hotchin has been fined $200,000 and sentenced to 11 months home detention and 200 hours community service after pleading guilty to making false and misleading statements.

Friday, March 4th 2011, 12:54PM 2 Comments

by Jenny Ruth

The fine will lead to Hotchin's bankruptcy, the Securities Commission says.

Nathans went into receivership in August 2007 owing about $174 million to about 7000 investors.

Justice Lang of the High Court said the starting point for sentencing for Hotchin's offences was three to four years in prison.

Justice Lang said Hotchin, brother of Hanover director Mark Hotchin who late last year became the first businessman to have his assets frozen, was entitled to a reduced sentence because of his guilty plea, his genuine remorse, his offer of $200,000 reparation and his agreement to assist the Crown in prosecuting other matters relating to Nathans.

Other former Nathans directors, including Donald Young, Kenneth (Roger) Moses and former managing director Mervyn Doolan, are due to go an trial on March 21.

The charges Hotchin pleaded guilty to related to a prospectus and investment statement dated December 13, 2006. The Securities Commission alleged statements about Nathans' lending to related parties, the quality of its loan book, its loan management practices and its management of liquidity were untrue.

A prospectus extension certificate in March 2007 contained untrue statements that Nathans' financial position had not materially and adversely changed since its last balance date and had not become false or misleading.

Securities Commission chair Jane Diplock welcomed Hotchins' early guilty plea and his co-operation.

"The starting point of the sentencing in these cases - a significant term of imprisonment - delivers a clear message to all issuers as t the importance of the Securities Act's requirements for full and truthful disclosure and the resulting impact on investors' confidence in the securities market," Diplock says

"The High Court has effectively endorsed the sentencing approach taken by the District Court in relation to Five Star directors Marcus Macdonald and Nicholas Kirk," she says.

« No more interest for Downer bondholdersSouth Canterbury Finance repays government’s $175m loan »

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Comments from our readers

On 4 March 2011 at 3:01 pm Stewart said:
Where did the Hotchin clan source their water from?
On 4 March 2011 at 8:25 pm Michael Donovan said:
I read with interest the particular comments half way through the above article...namely "lending to related parties, quality of the loan book and loan management practices".

Why is this not equally applicable to the likes of Doug Edgar (of Money Managers 'fame')in direct relation to the First Step finance funds???

Someone suggested to me today, that one seems to have managed to have "jumped out of the boat" in relation to being in the media limelight, and they wondered why...if it is the same basic list of accusations??

The question was asked "did John Hotchin merely omit to employ a good prospectus-writer who could have put in a couple of key "out-words") such as "predominantly?"

That was I assume in relation to the report which said Doug Edgar's finance fund had said it only invested "predominantly" in mortgages...when it was in fact marketed specifically as a "mortgage" fund.

They suggested that it just seemed to boil down to whether someone had employed a clever legal prospectus-writer?
Related party lending was reported as having been a major part of the diversion of investors funds from the investors account/s to those of the fund's related-paries?

How do others see this?
Michael Donovan
Commenting is closed



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