Securities Commission defends its record

Securities Commission defends its record

by Pattrick Smellie and Paul McBeth

Dec. 3 (BusinessDesk) – The Securities Commission says it has initiated 50 separate investigations, prosecutions, or referrals to other authorities in relation to the recent spate of finance company collapses.

Stung by suggestions from one of the country’s top lawyers, Bell Gully chairman Roger Partridge, that it “nodded off” during the finance company collapses, the commission released a list showing some 24 finance companies, including Hanover, Geneva, Equitable, South Canterbury and others less well-known, are the subject of continuing investigations.

In another 14 cases, charges have been laid and court action is pending, including against such well-known names as Bridgecorp, Capital & Merchant, Five Start, Nathans, and Lombard Finance.

The commission listed a further 12 finance companies, whose activities had been referred to another enforcement agency or, in eight cases, closed. In every case, the institution in question was either in liquidation, receivership, or moratorium.

The commission was criticised at a select committee hearing for not using its powers to act against inadequate disclosure.

The criticism has provoked a storm among top legal and regulatory circles this week. Bloggers on financial news websites have been speculating on the fees taken by major law and accounting firms when finance companies were writing prospectuses that the Securities Commission did not act against.

“The collapse of almost the entire finance company sector over a very short time period has meant that the commission has had to deploy its limited resources effectively in deciding which cases to investigate first,” chair Jane Diplock said in a statement.

“Investigations take time, and it’s important the public understands what is involved in our investigations, including how and when the commission decides to investigate, the enforcement powers we have, and why, in most cases, we don’t comment publicly about investigations under way or complaints received.”

Diplock defended the commission’s stance in refusing to provide progress reports on investigations, due to the “risk of causing unjustified damage to the reputation of businesses and people we are investigating” and the need to allow for a “fair and effective trial of a person who is eventually charged.”

The document also provides a general walkthrough of how the regulator probes offer documents, reiterating the limits of its powers as they relate to prospectuses and investment statements for all issuers.

(BusinessDesk) 19:45:36

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