FMA drops civil action against Insured Group

Financial Markets Authority chief executive Sean Hughes. Photo / Paul Estcourt

Civil proceedings brought against the Insured Group, for alleged continuous disclosure breaches, have been dropped.

The alleged breaches date back to 2008, when the company was known as Lombard Group Limited.

Lombard Group Ltd was the parent company of Lombard Finance and Investments Ltd that collapsed in April 2008 owing $127 million to 4400 investors.

Insured Group used the shell of the failed Lombard Group to achieve a backdoor listing on the NZX in March 2010.

The former Securities Commission's case against Insured alleged that Lombard Group's failure to disclose the circumstances giving rise to untrue statements to the market breached the continuous disclosure obligations of the Securities Markets Act.

Financial Markets Authority Chief Executive Sean Hughes said that FMA made the decision to withdraw the civil proceedings as part of the process of reviewing the case load inherited from the Securities Commission.

"We need to focus our energy and resources on the most serious areas of misconduct, and against perpetrators who set out to deliberately mislead or deceive innocent third parties.

"We concluded that the civil proceedings against Insured did not meet FMA's current tests for the types of matters we will prioritise.

Hughes said criminal charges against the directors of Lombard Finance and Investment Limited, remain.

- Susie Nordqvist