The Financial Markets Authority (FMA) has dropped some of its legal action against Insured Group, formerly Lombard Finance.
Lombard Finance collapsed in April 2008 owing $127 million to to 4400 investors.
Perth-based Australian Consolidated Insurance did a reverse takeover of Lombard in March last year and later changed its name to Insured Group.
The FMA has withdrawn civil proceedings against the firm for allegedly failing to disclose breaches in 2008, saying it is focussing its resources on the most serious areas of misconduct.
That includes the directors of Lombard's failed finance arm, Lombard Finance and Investments, who still face criminal action for misleading investors.
The directors include former National Party cabinet minister Sir Douglas Graham and former Labour cabinet minister Bill Jeffries, along with Michael Reeves and Lawrence Bryant.
Sir Douglas has rejected the claims, saying the directors will defend all charges.
The charges carry a maximum penalty of five years in prison or fines of up to $300,000 for each of the four men.