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Sir Doug Graham in court over Lombard failure

UPDATED - Former justice minister and leading Treaty of Waitangi claims negotiator Sir Doug Graham says he will defend civil and criminal charges laid by the Securities Commission over the failure of financier Lombard.The commission has yet to says whethe

NBR Staff
Tue, 13 Apr 2010

UPDATED - Former justice minister and leading Treaty of Waitangi claims negotiator Sir Doug Graham says he will defend civil and criminal charges laid by the Securities Commission over the failure of financier Lombard.

The commission has yet to says whether criminal charges will be laid though it said it was continuing its investigation.

The civil proceedings were laid in the High Court at Wellington on April 1.

They relate to a prospectus filed in December 2007, with the company receiving about $8.5 million in deposits before going into liquidation three months later.

Four ex-Lombard directors have now been charged by the Securities Commission after it concluded that investors who relied on the prospectus may have been mislead.

The Securities Commission confirmed it had issued civil proceedings under the Securities Act against Lombard Finance & Investments (in receivership) directors Sir Douglas Graham, Michael Reeves, Bill Jeffries and Lawrence Bryant.

"The commission alleges that Lombard Finance & Investments' offer documents and advertisements misled investors by misrepresenting the investment risks, especially in relation to liquidity, the quality of the loan book, adherence to credit policies and the company's overall financial positions," commission chairwoman Jane Diplock said.

In a media statement released today, Sir Doug said the Lombard directors did
not accept the allegations that investors who relied on the prospectus had
been misled and would be defending all the proceedings.

"The prospectus was prepared by management, commented on by the auditors and
solicitors and then accepted by the Companies Office. The document was sent
to the trustee. None of these advised the board of any concerns with the
final wording."

Sir Doug also expressed dismay at the time it had taken to make the allegations and said he was "very disappointed" the commission had never raised with him any concerns it had regarding the prospectus before it filed proceedings.

The commission has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the current four directors.

Lombard Finance was put into receivership in April 2008, owing $127 million to about 4400 investors. Its biggest asset, a property loan book worth $137 million, turned out to comprise mostly bare subdivisions or uncompleted residential developments.

NBR Staff
Tue, 13 Apr 2010
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Sir Doug Graham in court over Lombard failure
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