The New Zealand Shareholders Association today welcomed the announcement that FMA had filed civil charges against the directors and promoters of Hanover Finance. It is alleged that statements made in various fundraising documents and advertisements over the 2007/2008 period
were misleading and were untrue.
NZSA Chairman John Hawkins said that investors have long been keen to have allegations against the company tested in court. Today’s announcement was a big step in that direction. The change in regulator from the Securities Commission to the Financial Markets Authority has undoubtedly slowed the process in what has been a very complex investigation, he said.
We understand that the Serious Fraud Office is continuing its investigation into Hanover’s affairs said Hawkins adding that it
remained to be seen whether this separate enquiry would result in other charges being brought
Hawkins said that the Shareholders Association was comfortable with civil rather than criminal proceedings being brought by FMA. Civil penalties can range up to $5m depending on the circumstances, and more importantly, compensation can also be ordered. At the end of the day, investors would like to get some money back and this may be the best avenue said Hawkins. He also noted comments by CEO, Sean Hughes that it was possible further actions could be brought against Hanover by FMA.
Hawkins said the NZSA has been encouraged by the progress made since the formation of FMA. They have been proactive in giving guidance to the market, but when necessary, they are not afraid to use the legal teeth available to them. We think this should give investors a lot more confidence in the markets. He added that the new Financial Markets Conduct Bill now before Parliament will further strengthen the protections available. NZSA has been very active in promoting the investor viewpoint as this bill has been developed. Getting regulation right is critically important now that so many people have Kiwisaver as part of their long term savings plans he said.
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