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Hot Topic NBR Focus: GMO
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Investors call for action against regulators in Hubbard case

A meeting of about 200 investors in Timaru today called for the heads of regulators over their handling of matters relating to local businessman Allan Hubbard.The meeting, of mainly middle aged investors, was called by the group Exposing Unacceptable Fina

NZPA
Fri, 06 Aug 2010

A meeting of about 200 investors in Timaru today called for the heads of regulators over their handling of matters relating to local businessman Allan Hubbard.

The meeting, of mainly middle aged investors, was called by the group Exposing Unacceptable Financial Activities (Eufa), which claims to represent people who have lost money in the spate of collapsed finance companies.

Millionaire Allan Hubbard, 83, and his wife Jean had their privately owned investment company Aorangi Investments, trust companies and their personal bank accounts placed into statutory management in June. An investigation by the Serious Fraud Office was also launched.

The move raised the ire of the largely rural South Canterbury community, which held a march in Timaru in June in support of the Hubbards.

It has been reported Securities Commission member Simon Botherway, who is chairman of the establishment board of the Financial Markets Authority, has a brother who had been placed in receivership by South Canterbury Finance.

South Canterbury Finance is owned by interests associated with the Hubbards, but is not in statutory management.

Group member Paul Carruthers said Securities Commission chairwoman Jane Diplock knew of the alleged conflict of interest but had refused to take any action.

Mr Carruthers told the meeting he believed with "all his heart" that the Hubbards were innocent and that the move to place them in statutory management had been a travesty of justice.

The meeting supported a six-part submission by Eufa to the Government demanding in addition to the dismissal of Mr Botherway and Ms Diplock, a halt to all further action and an apology to Hubbards followed by a formal audit of the actions taken by authorities.

The submission also calls for compensation for the Hubbards and their investors and a commission of inquiry into the saga.

Speaking prior to the meeting, group founding member Gray Eatwell said statutory management was a useful tool for regulators to use, especially when the financial industry was facing the crisis of the last three years.

He said the Hubbards' situation had been poorly handled, and instead of preventing a crisis for investors the Serious Fraud Office had created one.

For the first hour of the meeting Mr Eatwell outlined a complex history of alleged failures by the Securities Commission and other regulatory authorities to adequately protect thousands of vulnerable investors.

Mr Eatwell told the meeting that, if the High Court had been asked to make the decision to place the Hubbards in statutory management and the alleged conflict of interest had been known, the matter would not have proceeded.

The commission has said it is satisfied Mr Botherway did not have a conflict of interest as the statutory management did not apply to South Canterbury Finance.

The Financial Markets Authority is expected to start operating next year. It will be an independent Crown entity which will consolidate the powers and functions of the Securities Commission, some of the functions of the Registrar of Companies and the Government Actuary, and some of the regulatory roles of NZX.

NZPA
Fri, 06 Aug 2010
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Investors call for action against regulators in Hubbard case
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