FMA withdraws civil proceedings against Insured Group

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News release

17 June 2011

FMA withdraws civil proceedings against Insured Group

The Financial Markets Authority has withdrawn civil proceedings against Insured Group Limited (Insured).

The case was commenced by the Securities Commission last year and related to continuous disclosure breaches the Commission alleged were committed by the company in 2008 when it was known as Lombard Group Limited (LGL).

LGL was the parent company of Lombard Finance and Investments Limited (LFIL) that collapsed in April 2008 owing $127 million to 4,400 investors. In March 2010, Perth-based Australian Consolidated Insurance Limited listed on the NZX by means of a reverse takeover of LGL and later changed its name to Insured.

The criminal charges against the directors of LFIL remain. These allege that the LFIL directors made untrue statements in offer documents issued in 2007 and 2008, and that investors were misled as a result. The trial starts in the High Court at Wellington in October 2011.

The former Commission's case against Insured alleged that LGL's failure to disclose the circumstances giving rise to the untrue statements to the market breached the continuous disclosure obligations of the Securities Markets Act.

A notice of discontinuance of civil proceedings was filed today in the High Court, and FMA and Insured Group have prepared an agreed statement, which accompanies this release.

FMA Chief Executive Sean Hughes said that FMA had made the decision to withdraw the civil proceedings as part of the process of reviewing the case load inherited from the Commission.

"We need to focus our energy and resources on the most serious areas of misconduct, and against perpetrators who set out to deliberately mislead or deceive innocent third parties.

"We concluded that the civil proceedings against Insured did not meet FMA's current tests for the types of matters we will prioritise.

"The civil proceedings were directed at the current board of directors, and would have been conducted at the cost of shareholders, who generally had no involvement in the non-compliant behaviour. Accordingly, we felt that continuing the proceedings would not provide a significant deterrent effect for other listed issuers."

Mr Hughes said FMA hoped that Insured Group was committed to complying with its continuous disclosure obligations.

ends

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