The Financial Markets Authority (FMA) intends to file civil proceedings against directors and promoters of Hanover Finance Ltd, Hanover Capital Ltd, and United Finance Ltd.
The proceedings will relate to statements made in the December 2007 prospectuses and subsequent advertisements of the companies.
FMA anticipates that a claim will be filed in 2012, against the signatories to the prospectuses, seeking pecuniary penalty orders and compensation for investors.
About 16,000 investors lost more than $500 million following the collapse of the companies and the sale of Hanover's assets to Allied Farmers.
"This has been a significant investigation for FMA, focusing on a period in which investor deposits totalled approximately $35 million,'' said FMA chief executive Sean Hughes.
"We have carefully considered a substantial volume of relevant material and we've had the benefit of independent advice.
"We have now reached a point in the investigation where we are confident that we have good grounds to commence civil proceedings. We believe this is the most effective regulatory response and we're confident it offers the greatest opportunity for success.
If successful, FMA's action may assist other parties in bringing related claims.
We are also examining avenues under section 34 [Financial Markets Authority Act 2011] to seek compensation from other parties on behalf of aggrieved investors,'' Hughes said.
"Given the public interest in the investigation we want to keep the market as informed as we can.''
- Hamish Fletcher, NZ Herald
