Boutique Dunedin company St Kilda Finance is one of six being dropped from investigations by the Financial Markets Authority, which believes no laws were broken before their respective collapses.
All Purpose Finance, which traded as St Kilda Finance, was placed in the hands of receivers in mid-November 2008 by its directors, owing almost $6.93 million to 358 mainly southern investors.
Its loan book, with lending of $9.6 million, was largely secured by second mortgages over property to New Zealand borrowers.
The other five companies dropped from FMA investigation are Geneva Finance, Mascot Finance, Strata Finance, Direct Property Investments (No 6) and Finance & Leasing.
St Kilda, which was headed by Dunedin businessman John Farry as chairman, suffered the same fate as dozens of other finance companies during a two-year period when risk-averse investors shied away, and reinvestment rates, and St Kilda's rates plummeted from 65% to 15%.
In the receivers' last six-monthly report, filed in July, distributions had amounted to about 30c in the dollar, with possible further distributions of 7c to 12c. The 336 investors, representing 419 term deposits, were owed $4.9 million, including accrued interest, as at July.
FMA chief executive Sean Hughes told The New Zealand Herald, "In those six cases in which we have decided not to pursue our investigations, we have carefully assessed whether we have information suggesting unlawful behaviour; whether such information is sufficient to justify charges or proceedings; and whether it would be in the public interest to prosecute."
The FMA had not found any breaches or had any brought to its attention in the six cases, Mr Hughes said.
Consistent with the FMA's enforcement policy, it has concluded there is no public interest in continuing its investigation, without sufficient cause.
The FMA continues to investigate 16 companies, involving about $3.45 billion of investor losses. It is likely to end investigations into five of the "most advanced" cases before the end of the year.
The companies are: Allied Nationwide Finance, Boston Finance, Equitable Mortgages, Hanover Capital, Hanover Finance, Kiwi Finance, LDC Finance, Mutual Finance, OPI Pacific Finance (formerly MFS Pacific), Property Finance Securities, South Canterbury Finance, St Laurence, Strategic Finance (including Strategic Nominees), Structured Finance, Viaduct Capital and Vision Securities.
The Financial Markets Authority has also closed its investigation into Rockforte Finance, after referring the matter to the Serious Fraud Office. Should the SFO not proceed to prosecution, the FMA might reopen its investigation, Mr Hughes said.
Rockforte Finance investors' capital is subject to a Crown guarantee, as are investments in Strata Finance and Mascot Finance. This means the Crown will compensate investors for their losses in part or in whole.
On June 20, the FMA announced it had closed its investigation into Aorangi Securities (including Hubbard Management Funds) and referred the matter to the Serious Fraud Office.
