Investors burnt by collapsed finance companies are being urged to pursue compensation from the indemnity insurers of company directors, following the Lombard Finance case.
Last month four directors of the failed Lombard Finance, including former cabinet ministers Bill Jefferies and Sir Doug Graham, were found guilty of making false statements in investment documents.
Stockbroker Chris Lee says the case sets a new benchmark as the judge found that companies cannot omit any relevant information on their financial statements. The court's finding means that the directors could be sued.
Mr Lee says the case has opened up an opportunity for investors in other collapsed finance company cases to seek redress through indemnity insurance held by directors, trustees and auditors.
"What you've now got is, basically, every finance company that did not properly disclose its problems with liquidity, bad lending, impaired loans and so on ... might now have the same sort of issues to face that the Lombard directors faced."
He says such compensation could be worth up to 40 cents more in the dollar than is repaid to investors.
Mr Lee said investors need to act quickly before the statute of limitations runs out.
