Legal action against the directors and promoters of finance company Hanover Finance has been launched by the Financial Markets Authority.
Financial Markets Authority (FMA) chief executive Sean Hughes confirmed to Q & A that it commenced action against Hanover's key members on Friday.
The action was brought because of misleading and untrue statements made in 2007 and 2008, Mr Hughes said.
Six people have been named in the action including Eric Watson, Mark Hotchin and Greg Muir.
On Tuesday Mr Watson said he understood the FMA could issue civil proceedings in the near future.
"If this does in fact occur, it will be after a detailed investigation by the Commerce Commission, the Serious Fraud Office, the Securities Commission and then the FMA that began almost three years ago and concluded that there was no case for criminal charges,'' he said.
He said the FMA concluded that there was no deliberate intention on the part of the directors of Hanover to mislead investors and that "while civil charges may follow, they [FMA] had a preference to settle rather than go through a lengthy legal process".
"If the civil proceedings go ahead it is important to note that they will relate specifically to a prospectus registered in December 2007 [withdrawn in July 2008], which the FMA have suggested raised approximately $30 million from a few hundred investors.
"These investment funds were not lost by Hanover Finance, which was one of the few finance companies in New Zealand to avoid receivership during the global economic recession.
"Regardless of this, as a shareholder, I am confident that any civil proceedings filed against the directors and promoters in respect of the prospectus will lack substance and will be successfully defended."
