The New Zealand Shareholders Association says the three Nathans Finance directors convicted yesterday were commercial hazards who had cost investors $174 million and should now do jail time.
"The scale of offending requires a message to be sent loud and clear," chairman John Hawkins said. "They bled the investors dry.
Now they should feel the pain themselves."
The association would not be satisfied unless there was a substantial custodial sentence and reparations, he said.
Yesterday, former Nathans directors Mervyn Doolan, Donald Young and Roger Moses were found guilty on five charges of breaching the Securities Act by Justice Paul Heath in the High Court at Auckland.
A fourth director John Hotchin pleaded guilty earlier and gave evidence for the prosecution.
Bruce Stewart QC, who acted for Hotchin, said after yesterday's verdict that his client had taken the right path.
"John did the right thing," Stewart said.
Hotchin is the younger brother of Hanover Finance's Mark Hotchin.
"He got credits in punishment for pleading guilty, paying $200,000 and showing remorse. It kept him out of jail," Stewart said, describing yesterday's 150-page decision against the other three as careful and lengthy.
Stewart would not speculate on whether the September 2 sentencing would result in the three other directors getting jail or home detention.
Other legal experts were resolute in their predictions that jail was almost certain for the three.
Stewart said Hotchin was now halfway through his 11-month home detention period - wearing an ankle bracelet and barred from leaving home except for 200 hours of community service or medical attention.
Hotchin will be free on February 4, Stewart said.
The three Nathans directors face five years' jail or a $300,000 fine.
Financial Markets Authority chief executive Sean Hughes yesterday welcomed the decisions for sending a clear message of responsibility to issuers of securities and their directors.
"Directors have a personal duty to ensure that disclosure documents and other advertisements do not mislead or deceive. That is a duty that cannot be delegated to staff or external advisers - the directors must form their own opinions," he said.
Assessing the judgment yesterday law firm Minter Ellison Rudd Watts noted that the directors argued they did not believe statements made to investors were misleading at time.
But despite the Court accepting that these were honestly held beliefs it did not accept that they had reasonable grounds for these beliefs based on information provided to them by others.
The Court held that it was the responsibility of the directors "to ensure independently that the statements reflected Nathans's true position, which they failed to do".
The trio were required to surrender their passports by 5pm last night and Doolan's attempts to go to Australia were denied.
He has family there but an application for the judge to consider an exception was flatly rejected.
They are not allowed to apply for travel documents and the judge said he intended to seek a pre-sentencing report "with a home detention appendix".
"Reparation is likely to be important in this case," he added.
Guilty trio
Mervyn Ian Doolan, Donald Menzies Young, Kenneth Roger Moses.
* Nathans Finance directors.
* Business failed 2007, owing $174 million to 7000 investors.
* The three pleaded not guilty to charges.
* Court found they breached Securities Act.
* Found guilty on 5 of 6 counts.
* Sentenced Friday, September 2.
John Hawkins. Photo / APN
The New Zealand Shareholders Association says the three Nathans Finance directors convicted yesterday were commercial hazards who had cost investors $174 million and should now do jail time.
"The scale of offending requires a message to be sent loud and clear," chairman John Hawkins said. "They bled the investors dry.
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