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

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news