Investors due finance company refunds, says Commission

Securities Commission chairwoman Jane Diplock. Photo / Richard Robinson

The Securities Commission says its investigations into finance companies show that many investors are entitled to refunds on their investments.

Where individuals and companies had broken the law by offering securities to the public without a registered prospectus, investors were entitled to a refund of their principal plus interest, the commission said today.

Investors who did not receive an investment statement before investing may also be able to seek a refund.

Investors could take action against both the issuers and the directors personally for recovery of their investment, the commission said.

The amount available may exceed the amounts returned on receivership or liquidation.

"The viability of any such action will of course depend upon the financial ability of the issuer or the directors to meet that liability."

Investors must take action themselves, the commission said.

"The commission is not able to take action for them. The commission strongly recommends that investors seek legal advice as to their entitlements, and the prospects of enforcing those entitlements."

The Securities Act required an issuer to have registered a prospectus before securities were allotted to a member of the public.

The issuer must also make sure the investor had received the related investment statement before that investor subscribed to the offer.

Following investigation by the commission a referral to the Companies Office's National Enforcement Unit resulted in a successful prosecution of Sharon Day and QED in relation to investment offers to the public by QED without a registered prospectus or investment statement, the commission said.

The enforcement unit had also filed similar charges against the directors of Five Star Debenture Nominees.

Investigations were continuing into other issuers that may have breached the law in that way.

- NZPA