John Hotchin, the younger brother of Hanover's Mark Hotchin, has avoided a jail sentence for breaching the Securities Act as director of Nathans Finance.
Hotchin pleaded guilty to three charges laid by the Securities Commission and was sentenced at the High Court at Auckland this morning.
He was sentenced to
11 months of home detention, 200 hours of community service and ordered to pay $200,000 in reparation.
The charges laid by the commission relate to statements made by Nathans, in receivership, in its registered prospectus and investment statements dated December 13, 2006.
The commission alleged that statements concerning Nathan's related party lending, the quality of the loan book, its loan management practices and its management of liquidity were untrue.
It also alleged the directors made untrue statements in a prospectus extension certificated in March, 2007, that stated the company's financial position had not materially or adversely changed since its last balance date.
Other directors Mervyn Doolan, Kenneth Moses and Donald Young have pleaded not guilty to similar charges, and their case goes to trial on March 21.
Justice Lange said the starting point for breaches of the Securities Act was a sentence of three to four years in jail.
Justice Lange said in Hotchin's case a starting point of three years would be appropriate.
However, he took Hotchin's guilty plea, his "genuine remorse" and his offer of reparation of $200,000 into consideration and handed out a reduced sentence.
The reparation will lead to Hotchin's bankruptcy and he has also agreed to work with the Crown in its prosecution against Nathans.
Commission chairman Jane Diplock said a term of imprisonment in such cases delivered a clear message to all issuers of the importance of the Act's requirements for full and truthful disclosure, and the resulting impact on investors' confidence in the securities market.
"By setting that point at three to four years for these breaches, the High Court has effectively endorsed the sentencing approach taken by the District Court in relation to Five Star directors Marcus Macdonald and Nicholas Kirk in December."
The commission said it welcomed an early plea by a defendant and co-operating in cases "of this nature".
