New Zealand’s securities regulator is taking civil proceedings against the directors of failed Lombard Finance & Investments Ltd., who include former Attorney General Doug Graham.
The regulator alleges offer documents and advertisements issued in 2007 misrepresented the risks of investment in the company, the Securities Commission said in a statement. The directors do not accept the allegations and will be defending all proceedings, Graham said in a separate e-mailed statement.
Lombard went into receivership in April 2008 owing NZ$127 million ($91 million) to about 4,400 investors, saying that property developers were unable to repay loans amid a housing slump. Secured creditors are likely to get less than 30 percent of their original investment, the commission said today.
The commission alleges that a prospectus in September 2007 and other documents in December that year contained false statements because they said the company’s financial position hadn’t materially changed since balance date.
The regulator wants the court to declare civil liability, which is the first step toward investors making claims for compensation against the directors, it said.
Graham and fellow directors Michael Reeves, Bill Jeffries and Lawrence Bryant are named in the proceedings. Graham was attorney general, responsible for advising the government on legal matters, from 1997 to 1999 and was a cabinet minister for nine years.
Graham, a lawyer before entering parliament, said he is dismayed at the time taken to make the allegations and disappointed the commission never raised any concerns it had over the prospectus with him.