The Securities Commission says there may be more legal action against four Lombard Finance and Investments directors, including former National Party cabinet minister Sir Douglas Graham.
Sir Douglas and other directors, former Labour Party Cabinet minister Bill Jeffries, Michael Reeves and Lawrence Bryant face penalties of up to $500,000 each for allegedly misleading investors.
The civil action by the Securities Commission comes two years after Lombard Finance was placed into receivership owing $127 million to about 4400 investors.
The commission claims the directors lied to investors about Lombard Finance's worsening financial position in its prospectus and investment statement in 2007 and advertisements in 2008.
It is seeking up to $2 million from the men as part compensation for investors.
The commission says more charges may follow against Lombard Finance and its parent, Lombard Group. It is understood criminal charges are pending.
Sir Douglas rejects the claims and says the directors will defend all charges.
He says Lombard raised $8.5 million in the three months between the prospectus and receivership and it is not known how many investors relied on the prospectus.
Sir Douglas says Lombard's auditors, the Companies Office and the Trustee, did not raise any concerns at the time and is disappointed the commission did not seek his views during its investigations.
Some investors have received money back - 6.5 cents for every dollar invested - but the receiver warned that secured bond holders would be likely to get less than 30% of their money back in December.