Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


FMA raps St Laurence directors over knuckles with warning

FMA raps St Laurence directors over knuckles with warning

By Paul McBeth

May 29 (BusinessDesk) - The Financial Markets Authority has issued a warning to the directors of failed lender St Laurence over potential breaches of the Securities Act, deciding against pursuing them in court as the breaches occurred during a four-month period when reinvestment was low and that there was no evidence of dishonesty or personal gain in the alleged misconduct.

The market watchdog has closed its investigation into the Wellington-based lender with formal warnings for Kevin Podmore, James Sherwin, Geoffrey McWilliam, Keith Sutton, Barry Graham, Aeneas Edward (Mike) O'Sullivan, Andrew Walker and Sandra Lee, it said in a statement. The FMA said St Laurence's September 2007 prospectus failed to properly disclose information about the lender's loan quality and liquidity between March and June 2008, but decided minimal additional benefit in terms of punishment, deterrence or redress for investors would be achieved by pursuing them in court. The finance company attracted $4.5 million in secured debentures during the period, indicating total aggregate losses to investors of $3.3 million.

"In balancing the cost of taking this case to court against the low level of recovery that might be achieved and also considering the possibility of successful defences being argued, FMA has elected to issue formal warnings to the directors," head of enforcement Belinda Moffat said. "A further relevant factor in deciding to issue a warning rather than take the case to court was the absence of evidence of personal gain or dishonest conduct on the part of the directors."

St Laurence was sent to the receivers in April 2010 after managing director Podmore, who put up a $20 million personal guarantee at the time of the lender’s moratorium, went against the trustee’s wishes by making an offer to debenture holders to swap their debt for equity in a new company that would hold the remaining assets.

Investors had previously agreed to a deferred repayment scheme, where 70 percent of the firm's debentures would be repaid by 2013 and the remaining 30 percent by 2021. Under that moratorium arrangement, note holders would have eventually been repaid by 2034.

Receivers Barry Jordan and David Vance of Deloitte wound up their administration in June last year, recovering 16.7 cents in the dollar, meaning about $35.4 million of the $212 million principal owed to about 9,400 debenture holders was repaid.

The return to investors was at the lower end of the 15 cents to 22 cents range the receivers had originally expected, and meant there wasn't any distribution for some $47.6 million of accrued interest or anything left over for unsecured creditors including the capital note holders.

The FMA inherited 25 investigations into failed finance companies from its predecessor organisation, the Securities Commission. The regulator is waiting for conditions to be met to allow a settlement with the board of Strategic Finance, and is a party to the Serious Fraud Office’s prosecution of South Canterbury Finance. It has filed charges against OPI Pacific Finance and Mutual Finance, and has civil proceedings pending against Hanover Finance.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

China Shopping: NZ-China FTA Upgrade Agreed Among Slew Of New Deals

New Zealand Prime Minister Bill English and China Premier Li Keqiang signed off a series of cooperation deals spanning trade, customs, travel and climate change and confirmed commencement of official talks on an upgrade to the nine-year old free-trade agreement between the two countries. More>>

ALSO:


Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news