Government fund to speed up finance company prosecutions

Wednesday 21 May 2008, 5:57PM
By Lianne Dalziel

Commerce Minister Lianne Dalziel has agreed to allow criminal prosecutions against finance companies that have misled investors to be funded from the Securities Commission’s Litigation Fund. This will require an amendment to her Output Agreement with the Commission.

"I want the regulator to have every support possible in order to allow it to take prompt and effective action that will help to rebuild public confidence in the finance market," Lianne Dalziel said.

Criminal enforcement falls within the powers of the Securities Commission, however currently the litigation fund is available for civil prosecutions only. Criminal cases have previously been handled by the Registrar of Companies’ National Enforcement Unit within the Ministry of Economic Development.

The Registrar of Companies will work with the Securities Commission on allocating responsibility for future criminal prosecutions. The Commission and the Registrar are already working with receivers and liquidators of failed finance companies. Although funding decisions have yet to be finalised, their work on the cases is well advanced.

Lianne Dalziel says criminal prosecutions under the Securities Act are an important part of the enforcement of the law.

"It's clear that the threat of criminal conviction is an effective deterrent to criminal behaviour. The government is committed to making sure the Securities Commission has the money to do the job well," Lianne Dalziel said.