(Media releases from the Securities Commission)
4 March 2011
John Hotchin, a former director of Nathans Finance NZ Limited (in receivership) ('Nathans') has pleaded guilty to three charges laid by the Securities Commission under section 58 of the Securities Act 1978.
The charges relate to statements made by Nathans in its registered prospectus and investment statement dated 13 December 2006. The Commission alleged that statements concerning Nathans' lending to related parties, the quality of its loan book, its loan management practices and its management of liquidity were untrue. It is also alleged that the directors made untrue statements in a prospectus extension certificate in March 2007 to the effect that the company's financial position had not materially and adversely changed since its last balance date and had not become false or misleading.
Mr Hotchin was sentenced in the High Court today by Justice Lang to 11 months home detention, 200 hours community service and payment of reparation of $200,000.
The Judge had indicated that the starting point sentence for these breaches of the securities laws was one of 3-4 years imprisonment. In Mr Hotchin's case, the Judge ruled the starting point was 3 years. His guilty plea, his genuine remorse, his offer of reparation of $200,000 (and the fact this will lead to his bankruptcy) and his agreement to assist the Crown in its prosecution of the matters remaining before the Court in relation to Nathans entitled him to a reduced sentence.
Commenting on the sentencing of Mr Hotchin, Commission Chairman, Jane Diplock, said, "The starting point of the sentencing in these cases - a significant term of imprisonment - delivers a clear message to all issuers as to the importance of the Securities Act's requirements for full and truthful disclosure and the resulting impact on investors' confidence in the securities market."
"By setting that point at 3-4 years for these breaches, the High Court has effectively endorsed the sentencing approach taken by the District Court in relation to Five Star directors Marcus Macdonald and Nicholas Kirk in December 2010.
"In common with regulators around the world, the Commission welcomes an early plea and co-operation in cases of this nature."
For further information about the charges laid by the Commission in relation to Nathans see the file attached to this page.
Trial of the other directors is now scheduled to commence on 21 March 2011. The prosecution on behalf of the Crown will be led by Mr Colin Carruthers QC.
Contact: Roger Marwick 04 471 7659
Note that the summary of facts referred to in the Judge's sentencing comments was agreed between Mr Hotchin and the Crown for purposes of his sentencing. Many of the facts contained in the summary remain in dispute as far as the remaining defendants are concerned.