By Jenny Ruth
Friday 17th June 2011
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The Financial Markets Authority has decided to withdraw civil proceedings against Insured Group, formerly Lombard Group, relating to breaches of NZX's continuous disclosure rules ahead of its finance subsidiary going into receivership in April 2008.
Insured Group was formed in March 2010 through Perth-based Australian Consolidated Insurance's reverse takeover of Lombard.
"The civil proceedings were directed at the current board of directors, and would have been conducted at the cost of shareholders, who generally had no involvement in the non-compliant behaviour," says FMA chief executive Sean Hughes.
"Accordingly, we felt that continuing the proceedings would not provide a significant deterrent effect for other listed issuers, Hughes says.
The Insured Group case is among those the FMA inherited from former regulator the Securities Commission and which it is currently reviewing.
"We need to focus our energy and resources on the mot serious areas of misconduct and against perpetrators who set out to deliberately mislead or deceive innocent third parties," Hughes says.
The FMA is still pursuing criminal charges against former Lombard directors, including former cabinet ministers Sir Doug Graham and Bill Jefferies, over alleged untrue statements in Lombard's offer documents in 2007 and 2008. The High Court trial is scheduled to start in Wellington in October this year.
When Lombard Finance and Investments went into receivership it owed about 4,400 debenture and note holders $127 million. Receiver John Fisk of PricewaterhouseCoopers told investors in his latest update in March he expects the secured debenture holders will get between 11% and 24% of their money back, depending on whether a potential Inland Revenue Department claim of $4.5 million is accepted
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