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FMA welcomes Nathans’ sentencing

2 September 2011

FMA welcomes Nathans’ sentencing

The Financial Markets Authority today welcomed the High Court’s sentencing of three directors of collapsed finance company Nathan’s Finance.

Chief executive Sean Hughes said the sentences send a clear message that the Courts regard the inclusion of untrue statements in issuers’ offer documents as a serious breach of the law.

“The guilty verdict in this case, and the penalties imposed, show financial markets participants can expect to be held accountable for their conduct,” Mr Hughes said.

“This case demonstrates that directors have a personal duty to ensure documents and advertisements offering securities to investors do not mislead or deceive. This is not a duty they can delegate to staff or external advisers.”

Nathans directors Mervyn Doolan, Roger Moses and Donald Young were found guilty on 8 July, 2011 of offences under section 58 of the Securities Act on the basis of untrue statements made in Nathans’ 2006 prospectus and investment statement.

FMA alleged that the directors were responsible for untrue statements made in the registered prospectus and investment statement of Nathans in December 2006.

The statements concerned:

• Lending to related parties, including Nathans' parent company VTL Group.
• Claims that Nathans had no bad debts.
• That it had adequate liquidity and diversified lending.
• That loans were made and managed in accordance with robust policies and processes

ENDS

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