Hanover Finance’s investment material painted a picture much rosier than the true state of the books, according to the Financial Markets Authority’s ammunition for civil proceedings.
The FMA’s High Court statement of claim, first revealed by NBR on April 12, lays bare the full arsenal the market watchdog will use against the six former Hanover Finance directors and promoters.
Mark Hotchin, Eric Watson, Greg Muir, Sir Tipene O’Regan, Bruce Gordon and Dennis Broit will defend 10 civil actions under the Securities Act.
If the FMA is successful on all 10 civil actions, the six men could be ordered to pay up to $5 million each in penalties, or $30 million in total, the statement of claim reveals.
The FMA alleges certain statements made in Hanover Finance’s December 2007 prospectus and its March 2008 extension certificate and advertising were misleading and untrue.
Specifically, Hanover’s December 2007 prospectus contained untrue statements around liquidity.
One area where alleged misleading and untruths are found is in chairman Greg Muir’s statement, which talked up Hanover’s profits levels, which “reflect our close management of the return and risk profile of our loan book”.
The FMA claims those statements were untrue because they omitted material about the deterioration of Hanover’s liquidity between June 30, 2007, and December 7, 2007.
During that time, the FMA claims total secured deposits fell from $825,911,000 to $651,902,000.
Meanwhile, reinvestment rates fell from about 81% to 34%.
Read more details about the FMA’s case in tomorrow’s National Business Review print edition.
See the full statement of claim here.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Joyce associates openly talking about leadership change
- Parent, widow of Pike River casualties fail to force review of decision to drop charges against Whittall
- iPredict decision the work of 'officious aliens' – Crampton
- Tech expert's complaint about 'snake oil' ad upheld
- Fonterra says farmer loan support package will cost $390 million
Most listened to
- Tim Hunter on why Veritas is doing it the hard way
- Matthew Hooton on whether Steven Joyce will be the next national leader
- Rodney Hide on why all city planners should be fired
- Nevil Gibson discusses his latest Editor's Insight on films
- The NBR crew throw around some of the week's top stories
- Rob Hosking breaks down the political and economic week that was
- "A tragedy" - David Farrar on his disappointment with Simon Bridges
- New F&P product pipeline exciting, says Macquarie senior investment adviser Brad Gordon
- Taupo Motorsport Park executive director Tony Walker on the park's rebranding
- NZIER senior economist Christina Leung on why she does not think the OCR will hit 2%
- NBR's Cameron Officer talks about the NBR Car of the Year 2015
- John Barnett on Brewer: ‘Boy, has he got a bit to learn’