Investors in failed lender Strategic Finance have welcomed plans by the Financial Markets Authority to pursue six of the company's directors over alleged Securities Act breaches.
The FMA said it had finished its investigation into the company and concluded that directors Kerry Finnigan, Graham Edward Jackson, Marcel (Marc) Aubrey Lindale, Timothy John Rich, Denis Grenville Thom and David John Wolfenden had likely breached the act in an advertisement, registered prospectus and investment statement between March and August 2008.
The FMA said the six directors had been notified of its findings and had been given the opportunity to respond to its proposed claim before civil proceedings were filed.
Strategic - once headed by the late Jock Hobbs, a former All Black captain - went into receivership in March 2010 owing $383 million to around 11,000 investors, many of whom were elderly.
Aucklander Ian Stephenson, who invested $50,000 in the company, said he was pleased with the FMA's decision.
The 77-year-old had been suffering from ill health around three months before Strategic's funds were frozen in 2008 and at that time attempted to get his money back.
But Strategic had refused to release his funds, saying he did not qualify, Stephenson said.
"I was pretty bitter about the whole business."
Rowland Crone, who had $70,000 invested in Strategic, said he was happy to hear that the FMA was pursuing the six directors but it was too late for investors to get all of their money back.
Receivers PwC have returned 10c in the dollar to secured debenture holders to date, the FMA said.
In 2010 Crone said the firm had failed to disclose the extremely high-risk nature of its business and exactly who it was lending to.
Thom rejected that criticism, saying all of the company's accounts were audited and the business was transparent with excellent corporate governance.
Crone, also 77, said the truth had finally come out yesterday.
"It's all coming home to roost, but too late."
Asked why the FMA was pursuing civil, rather than criminal, action, a spokesman said: "FMA's enforcement policy includes taking action which FMA considers will achieve the appropriate regulatory outcome."
He added this may include being able to participate in settlement discussions in the interest of investors."
Finnigan declined to comment on the FMA's announcement yesterday, while other directors did not return calls.
Strategic loaned money primarily to developers and investors in commercial, industrial and residential property in New Zealand, Australia and the Pacific Islands.
The FMA ruled Hobbs out of its investigation into Strategic in 2011 based on medical evidence.By Christopher Adams Email Christopher