FMA’s case against Hanover revealed
The Financial Markets Authority has revealed its case in its civil proceedings against former directors and promoters of Hanover Finance.
Friday, 13 April 2012
While no criminal charges have been laid over the collapse of the finance company, the FMA has gone to court seeking compensation orders and pecuniary penalties against Mark Hotchin, Eric Watson, Sir Tipene O'Regan, Greg Muir, Bruce Gordon and Dennis Broit.
Brian Dickey, the lawyer representing the FMA, has filed a statement of claim in the High Court that outlines the FMA's case that Hanover misled investors about the state of its finances in the lead-up to it being placed in moratorium and eventually bought by Allied Farmers.
Its first cause of action was that a prospectus registered in December 2007 and extended in March 2008 left out important information about declines in Hanover's liquidity during this period
In particular its total secured deposits declined from $825.9 million in June 2007 to $651.9 million in December 2007, down further still to $569.3 million in March 2008.
Meanwhile, its reinvestment rate fell from 81% in June 2007 to 28% in March 2008, and cash holdings shrank from about $150 million in June 2007 to just $54 million six months later.
FMA said the prospectus also omitted forecasts that Hanover Finance would breach its 7% liquidity buffer during the next 12 month period.
Its second cause of action relates to an investment statement also issued in December 2007, alleging Hanover made untrue statements regarding liquidity and Hanover's principal source of funds.
Its third, fourth and fifth causes of action all relate to advertisements FMA says contained untrue statements.
One, in summer 2008, claimed "the outlook is very positive for larger, well managed businesses such as Hanover and we are in a strong position to benefit."
However, according to the FMA the ad didn't mention Hanover was "regularly forecasting shortfalls in projected loan maturities against deposit maturities and therefore not regularly maintaining a balance between the maturities of loans and investor deposits."
Commenting is closed
Find a Rate
14 October 2016
18 August 2016
20 June 2016
9 May 2016
11 April 2016
Cash PIE Rates
Weekly Updates including news and commentary
Disclaimer - Every possible effort has been made to keep the information in the tables and on this site as accurate as possible, however, neither the publisher, Tarawera Publishing, nor anyone engaged to compile the rates and this site accept any liability for inaccuracies or any loss suffered as a result. It is strongly advised that readers check loan details with providers. The full terms and conditions of this site can be found here.
© Copyright 1997-2016. Tarawera Publishing Ltd. All Rights Reserved.