3 Apr 2012

Regulator follows through with Hanover action

6:17 am on 3 April 2012

The capital markets watchdog has made good on its promise to take legal action against Hanover Finance.

After threatening to do so late last year, the Financial Markets Authority has now filed civil proceedings against the directors and promoters of Hanover Finance, Hanover Capital, and United Finance.

They are Mark Hotchin, Eric Watson, Greg Muir, Sir Tipene O'Regan, Bruce Gordon and Dennis Broit.

The FMA claims Hanover misled investors in its December 2007 prospectuses and advertisements and the March 2008 prospectus extension certificate, from which the finance firm collected $35 million from investors.

The men face bans, penalties and paying compensation to investors.

A lawyer representing three thousand former Hanover investors, Tim Rainey, says the authority's action could aid the investors' efforst, which include examining the role of the trustee, Guardian Trust.

Allied Farmers acquired Hanover's loan books in a $400 million debt-for-equity swap in late 2009. The deal later turned sour, with Allied accusing Hanover's owners Mark Hotchin and Eric Watson of misleading it.

The men charged either did not return calls or said they did not have anything to say at this stage.

In December, former Hanover chairman Greg Muir said the directors would deny the charges when they were filed.

The Serious Fraud Office is also investigating Hanover.