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Hanover court date set for July 2015

The directors and promoters of the failed Hanover Finance group of companies will have their day in court in the middle of next year, more than three years after civil proceedings were filed against them by the Financial Markets Authority.

A 12-week hearing in the High Court in Auckland will start on July 20 next year when defendants Mark Hotchin, Eric Watson, Gregory Muir, Sir Tipene O'Regan, Bruce Gordon and Dennis Broit face the regulator's claim they signed off on untrue prospectuses and misleading advertisements concerning the period between December 2007 and July 2008, during which time $35 million was deposited with the lender, according to the FMA's website.

The regulator is seeking compensation, declarations of civil liability, civil pecuniary penalties of up to $500,000 against each of the five directors and promoters, and says they each face a five-year management ban if pecuniary penalties are found.

The hearing date comes more than a year after the Serious Fraud Office completed its $1.1 million, 32-month probe into Hanover, which raised some concerns around the lender's behaviour but found nothing that crossed the threshold to warrant a criminal prosecution.

In July 2008 Hanover Finance froze $554 million of funds for its 17,000 investors after running into financial difficulties before convincing them to accept a disastrous deal where their debt was swapped for equity in Allied Farmers.

Principal Mark Hotchin's assets have been frozen since December 2010 by the FMA's predecessor, the Securities Commission, including the proceeds from his multi-million dollar mansion on Auckland's exclusive Paritai Drive.

The market watchdog has almost finished its pursuit of failed finance companies, which collapsed in the latter half of last decade, and left investors with little or nothing from their investments. The FMA inherited 25 investigations into failed finance companies from its predecessor. Early last month the regulator settled with the board of Strategic Finance for $22 million, and is a party to the Serious Fraud Office's ongoing case against South Canterbury Finance.

The FMA has filed criminal charges against OPI Pacific Finance, Viaduct Finance and Mutual Finance.


Comments and questions

This maybe in the St Laurence level of breach, whereby they censured the directors for not disclosing the true state of the books. This just taken so long as the FMA wished to fulfill the publics want for blood when in truth the directors may have morally done wrong but legally not one law broken. I guess we can wait another 18 months before finding out. Even if found guilty the most they have to pay is $500K each and if each is guilty that’s $2.5m. Nothing to the investors! $1.1 spent by the SFO probably the same by FMA and more to follow, a waste of taxpayer money. No jail terms sorry ghouls.

Of course Mark Hotchin and friends are pillars of Society

All this attention is unfair and unwarranted

Yeah Right

Hopefully it gives enough ammo for a civil case

New Zealand sadly lacks any real class action lawyers, we need to open justice up for the Slaters & Gordon's and Maurice Blackburn's of the world to work here!!

You would regret that the day that it happened. the US legal scene is like hell on earth

The retail shareholders of Newcrest, David Jones, QBE, TWE and Leightons would beg to differ

Why bother with the civil case when the SFO gave the Hanover boys a guided trek up to the moral high ground, by not prosecuting. Instead -- despite the $1.1m cost of their investigation -- opted for an admonishment to rival that of a school teacher giving a pupil a telling-off.

Trust me, even if the court finds against them, the penalties imposed will not even be remotely commensurate to the cost, resources, energy and time expended.

When it comes to the regulators and the legal fraternity, dining-out on the taxpayer is one thing; profligate gorging, quite another.

Shameful! Good, hard-working, kiwi mums and dads should be able to invest at 5% above term deposit rates and not have to worry about complex issues like risk and default. Why didn't Hanover just invest their money in something really secure that was yielding 14%.

People seem to have forgotten Hotchin & Watson withdrew $90 odd million, just before Hanover went belly up.

Everyone other than the law knows the truth in this matter, apart from the law; which is clearly an ass.

There will be someone other than Hotchin & Watson who know the truth in this matter, and its time they did a service to their community, rather than stay silent.