PROMINENT New Zealand financial advisors Roger Moses and Gary Stevens have appeared in the District Court in Auckland on charges of breaching the Securities Act over contributory mortgage misdemeanours.
The case, brought by the Crown, is seen to be the first real test of the contributory mortgage laws in New Zealand.
Moses and Stevens face 16 charges of breaching the Securities Act in 1999 in relation to development loans to four projects. They have denied the charges.
The alleged irregularities came to light after ASB Bank subsidiary Sovereign sold financial planning and contributory mortgage company Reeves Moses to Harts Australia.
The trial is technical and complex, but centres on the statutory information documents distributed to investors. It is alleged that the two men, as directors of Reeves Moses Hudig Mortgage Brokers Ltd and Reeves Moses Hudig Nominee Co Ltd, distributed, or allowed to be distributed, misleading and incorrect offer and allotment documents to the public.
Prosecutor Brian Dickey said as directors they were obliged by the Securities Act to know what happened in their companies, and to know when their employees were not acting properly with contributors’ funds.
“The regulations do not permit the defendants to absolve themselves of their obligations by delegating responsibilities to employees,” Mr Dickey told Judge Hole in opening the Official Assignee’s case against the two men.
On indictment, they would be facing five years’ jail or a $25,000 fine. On summary conviction (their liability on charges that stay within the district court), their liability would be a maximum of three months’ jail or a $15,000 fine.
Section 59 imposes criminal liability for offering, distributing or allotting securities in contravention of the Act, with the maximum penalty on summary conviction of a $15,000 fine.
The trial has been set down for a fortnight, but should be over by early next week.
The separate trial of their mortgage manager, Peter Van Nieuwkoop, on similar charges is delayed without a trial date set because the court didn’t appoint a judge.
