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Lombard Finance directors plead not guilty as case opens

Monday 17th October 2011

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The directors of failed lender Lombard Finance & Investments pleaded not guilty to claims they published untrue statements in a prospectus and investment statement leading up to its eventual collapse in 2008.

In the High Court in Wellington, chief executive Michael Reeves, and three directors - former Cabinet Ministers Doug Graham and Bill Jeffries, and Lawrence Bryant - pleaded not guilty to five counts relating to claims they made untrue statements in a 2007 prospectus, investment statement and advertising material.

In his opening address, Crown prosecutor Colin Carruthers said the statements mislead investors about Lombard Finance’s ability to meet its debt obligations to investors as they fell due, saying liquidity was a different test to solvency.

He also said the documents didn’t adhere to Lombard Finance’s credit and governance policies.

Last year, the then-Securities Commission laid civil and criminal proceedings against the directors.

Lombard went into receivership on April 10, 2008, owing approximately $127 million to about 4,400 investors, and it is unlikely that secured debenture holders will receive more than 24 percent of their investment back.

Unsecured creditors are likely to receive nothing. The case in continuing.

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