The four directors of Lombard Finance - including former cabinet ministers Sir Douglas Graham and William Jeffries - have been found guilty of making untrue statements in the company's offer documents.
Graham, Jeffries, Lawrence Bryant and Michael Reeves received the verdict in the High Court at Wellington this morning, and were remanded on bail until a hearing for sentencing on March 29.
The charges, under the Securities Act, related to the company's prospectus in December 2007 and whether their 4400 clients were misled by untrue statements about the company's position and associated risks.
Judge Robert Dobson said the Crown had proven beyond reasonable doubt aspects of four charges, including failure to properly disclose the company's liquidity risks and deteriorating cash position.
They were found not guilty of distributing an advertisement that included an untrue statement by sending a letter to investors in March 2008.
The charges carry a maximum penalty of five years' imprisonment or fines of up to $300,000.
Judge Dobson indicated that a community sentence would be appropriate, but said a prison sentence was a possibility.
Family of the accused wept quietly as the guilty verdicts were read out.
Outside the courtroom, Hutt residents Gino Zambon , 78, and Paul Wah, 79, high-fived and said they were "marginally satisfied" with the verdict.
Mr Wah said he had invested his life savings with the company based on the integrity of the directors, and Graham should be stripped of his knighthood.
"How can a knight of the realm be ... not a common criminal but someone guilty of criminal conduct? My fondest wish would be to see those guys on bread and water for a few years.
"What justice there is, is in the discrediting of those people. For us, who put their faith in the veracity of these people ... What you're talking about is the ruination of our lives, so there can be no justice for us."
He said a jail sentence would be a just result for Reeves.
"Reeves is the chief culprit. He is the principal villain and I think (jail) would be entirely justified. I don't see any point in incarcerating old men."
The verdict meant there was "a little less anger" for him to carry around.
Mr Zambon, who had invested a "substantial" amount with Lombard, said he would await the sentencing before deciding if justice has been served.
"We'll see on March 29. They should be made to wear a yellow jumpsuit when they do their community sentence and clean-ups, and it should be published in the paper so people can go and look at them and say,'oh how the mighty have fallen'."
He agreed Graham should lose his knighthood.
"In my eyes it should be stripped. Why would a person in that position compromise himself to that extent? It's unbelievable"
Graham directed questions to his lawyer, Paul Davison, QC, who said he was considering appealing the decision.
He said the verdict, in only upholding aspects of the Crown case, reflected the "honesty and integrity in relation to their management and governance of this company".
"We're disappointed there has been a verdict of guilty in relation to issues concerning disclosure of liquidity matters in the documents on offer to the public. That is an issue we'll be looking at closely.
"There was nothing in the way this company was operated that was intentionally misleading in any way whatsoever, and the fact that the Crown has proven its charges in relation to these liquidity issues is a matter of hindsight, judgement and assessment that is clearer now than was ever available to those making decisions at the time."
He said the circumstances did not warrant "any deprivation of liberty whatsoever" and a community sentence would be appropriate.
In a statement, Graham said: "The directors very much regret that any investor may have been misled and subsequently lost some of their capital. The directors did all they possibly could to save the company to protect investors and acted on expert advice at all times."
Mr Wah did not hold out much hope that he would recover his money, but that would depend on civil action that the company's receivers were considering.