The Financial Markets Authority said yesterday it had discontinued its civil proceedings against the directors of Capital + Merchant Finance Ltd.
The Financial Markets Authority’s predecessor, the Securities Commission, laid criminal charges in 2009 under the Securities Act against 5 directors of the company – Neal Nicholls, Owen Tallentire, Colin Ryan, Wayne Douglas & Robert Sutherland. These charges related to untrue statements in offer documents distributed in 2006.
At the same time, civil proceedings were filed against 4 of the directors – Messrs Nicholls, Tallentire, Ryan & Sutherland – seeking declarations of civil liability & civil pecuniary penalties. The civil proceedings were stayed pending the outcome of the criminal proceedings.
The Financial Markets Authority assumed responsibility for the criminal proceedings alongside the Crown Solicitor in 2011. In 2013, the 5 directors pleaded guilty to the criminal charges and received varying sentences of home detention, community work, and some directors made reparation payments of between $60-100,000.
Capital + Merchant Finance’s liquidators settled their claim this year against the company’s former auditors for $18.5 million. The Financial Markets Authority said this sum was subject to claims from a number of other parties and the balance would be available for distribution to investors. The receivers’ claim against the company’s former trustee & former solicitor is still before the courts. The receivers hope to write to investors in the next 2 months to start the distribution process.
The Financial Markets Authority said it had determined that, in light of the outcome of the criminal proceedings, the actions taken by the receivers & liquidators and the limited personal assets of the directors, there would be little prospect of any recovery for investors if it were to pursue its civil claim.
“The authority considers that the misconduct that was the subject of the civil proceedings has been adequately addressed through the criminal process, and the further time & cost of pursuing the civil proceeding would not be justified or in the public interest.”
Capital + Merchant Finance owed $167 million to 7500 investors when it was placed in receivership in November 2007.
Attribution: FMA release.