KEY POINTS:
Nine directors of failed finance companies Bridgecorp and Nathans Finance face having to pay $500,000 each in compensation to investors if new court action is successful.
They also face a maximum of five years in prison or fines of up to $300,000 if convicted of criminal charges.
The Securities Commission has laid charges against three directors of Bridgecorp and four Nathans Finance directors.
The move includes civil proceedings which could lead to the compensation payments.
Former Bridgecorp boss Rod Petricevic and fellow director Rob Roest were each already facing five criminal charges, and are now also the subject of the civil proceedings.
Bridgecorp collapsed in July last year, owing 14,300 investors $459 million. Related company Bridgecorp Investments owes another $29 million.
Nathans Finance went into receivership a month later, owing $174 million to 7000 investors.
Bridgecorp's chairman, Bruce Davidson, and non-executive directors Gary Urwin and Peter Steigrad have now been charged alongside Petricevic and Roest.
Nathans Finance directors John Hotchin - brother of Mark Hotchin, who co-founded troubled Hanover Finance - Donald Young and Kenneth Moses face criminal and civil proceedings.
A fourth Nathans director believed to be living in Australia has also been charged.
The civil proceedings were laid under the Securities Act and involve declarations of the directors' liability.
They are the first step towards compensation for investors, and would allow the Securities Commission to pursue compensation claims.
The commission says the directors misled investors by making untrue statements in investment statements and prospectuses.
Bridgecorp's documents, signed by the directors in December 2006, allegedly misrepresented its financial position, which the commission believes had been deteriorating since June 2006.
The Registrar of Companies' case against Petricevic and Roest alleges Bridgecorp staff were told to lie to investors who complained about late interest payments by blaming a bank error or computer glitch.
It says the finance company was so short of money that in April 2007, three months before it collapsed, it had only $45,000 available to meet $2 million in payments due to investors.
The Securities Commission alleges the Nathans Finance directors signed untrue statements saying the company had no bad debts, had adequate liquidity, that its lending was diversified, and that it made loans in accordance with robust policies.
It says they misled investors over Nathans' lending to its parent company, vending machine operator VTL which is also now in receivership.
The Securities Commission says it has worked with the receivers of both companies to bring the charges, and in the case of Bridgecorp with the Companies Office and the Serious Fraud Office.
The Serious Fraud Office is continuing its investigations into Bridgecorp.
The Nathans directors are to appear in the Auckland District Court on January 23, and the Bridgecorp directors will appear on February 24.
* Names and figures
Bridgecorp
Former executive director Rod Petricevic and director Rob Roest already face five criminal charges, and now also face civil proceedings.
Chairman Bruce Davidson and non-executive directors Gary Urwin and Peter Steigrad are now charged alongside Petricevic and Roest.
Bridgecorp owes $459 million to 14,300 investors; they could get back as little as 13c in the dollar.
Bridgecorp Investments owes $29 million which is unlikely to be recovered.
Nathans Finance
Directors John Hotchin, Donald Young and Kenneth Moses face criminal and civil proceedings.
A fourth Nathans director believed to be living in Australia is also charged.
Nathans Finance owes $174 million to 7000 investors; less than 10 per cent is expected to be recovered.
Penalties
Up to five years in jail or fines of up to $300,000 if convicted of criminal charges.
$500,000 each in compensation payments.
