Nathans Finance director Donald Young. Photo / Dean Purcell
A prosecution witness yesterday offered the court insight into the effort Nathans Finance put into retaining investors in 2006.
Former Nathans directors Mervyn Doolan, Donald Young and Kenneth (Roger) Moses are on trial for six alleged breaches of the Securities Act.
The case started on Monday and is expected to
last several weeks.
The directors pleaded not guilty on Monday to six alleged breaches of the Securities Act.
A fourth director, John Hotchin, younger brother to Hanover's Mark Hotchin, pleaded guilty to similar charges in February and was sentenced earlier this month.
Marion Short gave evidence on Tuesday and yesterday on her role as sales and marketing co-ordinator for VTL - Nathans' parent company - and her work on Nathans.
She said retaining investors was as important as sourcing new investors in 2006.
Short said Nathans was retaining just over 70 per cent of investors in 2006, which was good considering the climate at the time.
She said retention rates had dropped below 50 per cent for many finance companies and they were struggling to attract new investors.
Short said she was happy with the 70 per cent, however the directors - Doolan, Moses and Young - wanted to achieve a 75 per cent retention target.
Crown lawyer Colin Carruthers, QC, said Nathans was still taking in debenture funds in August 2007 - the same month the company was placed into receivership - and that the company's position, especially in regards to liquidity, was "hopeless and the public should have been advised".
When Nathans collapsed it owed $174 million to about 7000 small investors.
Nathans was mainly set up as a funding vehicle for VTL, and its associated entities which purchased vending franchises from VTL.
The group operated in the United States, Europe, Australia and New Zealand.
The directors are defending allegations that the statements they issued concerning related party lending (to VTL), the quality of its loan book, its loan management practices and its management of liquidity were untrue.
The commission claims the directors made untrue statements in the company's registered prospectus and investment statement of December 13, 2006. It further alleges the directors made untrue statements when they signed a prospectus extension certificate on March 30, 2007.
