New Zealand's Financial Markets Authority: Court Of Appeal Rejects Lombard Directors’ Appeals Against Conviction; Sentences Found To Be Inadequate

The Financial Markets Authority says the decision by the Court of Appeal in the Lombard Finance case further clarifies directors’ duties and will help restore investor confidence.

The Court has today rejected an appeal against conviction by Sir Douglas Graham, Michael Reeves, Lawrence Bryant and William Jeffries, and accepted FMA’s appeal that the original sentences were inadequate. A decision on sentence will be made once the Court has received reports on the suitability of home detention.

The directors were found guilty of making untrue statements in a registered prospectus and were sentenced to periods of community service. Sir Douglas Graham and William Jeffries were also each ordered to pay $100,000 as reparation.

FMA Head of Enforcement, Belinda Moffat, said today’s decision reinforced the statutory obligation of directors to ensure that the statements made in the offer documents are true.

“The Court has clarified that the duties on directors under the Securities Act to ensure that offer documents are true overrides the duty that they owe to the company to act in its best interests, if they conflict,” said Ms Moffat.

“The Court has reconfirmed that the purpose of the Securities Act is to protect the investing public through timely disclosure of material information,” she said.

Lombard Finance & Investments was placed in receivership in 2008, owing $111 million to approximately 3600 investors.

A copy of the Court of Appeal decision can be found here.