The Securities Commission claims Nuplex's share price would have fallen by at least a third if it had told the market it had breached its banking commitments in late 2008.
Six current and former Nuplex directors face penalties of up to $1 million dollars each. One of them, David Jackson, has resigned as a member of the Securities Commission.
In its statement of claim filed with the High Court in Wellington on Wednesday, the commission said Nuplex knew it would breach its banking covenants on 17 December.
The resins maker told its bank about the breach and a proposed solution to fix it on 22 December, though the bank said it would not be able to respond until the next month.
The commission claims it should have released the information then, breaching the continuous disclosure rules.
If it had, the commission says Nuplex's shares would have fallen 30%.
It argues Nuplex's failure to do so harmed buyers of Nuplex's stock and damaged the reputation of New Zealand's securities markets.
The commission alleges Nuplex should have also revealed the breach in late January, which it says would have also caused the share price to fall by 30%.
Nuplex admitted it would breach its banking covenants on 19 February after a query by the stock exchange, following a downwards revision of its forecast earnings earlier in the month.
The commission claims a third breach occurred when Nuplex reported its half year result in late February, which included the confirmed breach.
Nuplex rejects the commission's claims.
The company says it did not breach continuous disclosure rules as negotiations with its banks were not complete, and a premature announcement would have hurt Nuplex, its shareholders and its banks.
The first hearing in the case against Nuplex will take place in June.