Mr Arkinstall and ISI chairman Sean Carroll announced the resignation in separate releases yesterday. Mr Arkinstall will continue to work until July 31.
Mr Arkinstall said, "Whilst I am disappointed to be leaving ISI after 10 years as chief executive, the recent announcement that I am to face charges resulting from my role as an independent director of Dominion Finance means that it would not be appropriate that I continue as chief executive of ISI; therefore resignation is the proper course".
Dominion Finance and North South Finance directors involved in the charges alongside Mr Arkinstall are Terence Butler, Ann Butler, Paul Forsyth, Robert Barry Whale and Rick Bettle, the latter the former chief executive of Invercargill-based Alliance Group.
The directors could face a maximum penalty of five years' imprisonment or fines of up to $300,000 if found guilty on the criminal charges; and up to $500,000 fines on the civil proceedings.
Mr Carroll said discussions had been "amicable" and while an earlier outcome would have been "preferred", Mr Arkinstall had put the ISI's "credibility and reputation ahead of his own personal circumstances" when making his decision to resign.
"He will be strenuously defending the charges, but in the interim he believed it would not be in the ISI's best interests to continue as chief executive during court proceedings," Mr Carroll said.
Dominion Finance was placed in receivership in September 2008, owing about $176.9 million to 5900 investors. North South Finance, which was in moratorium and had paid back about $54 million of $102 million owed, was placed in receivership last week, a day after the charges were laid.
The allegations include that Dominion Finance documents and advertisements misrepresented the investment risks, especially in relation to associated party transactions, lending standards, loan quality and impairment, liquidity and the company's overall financial position, with similar allegations over North South Finance cited by the Securities Commission.
