2008 Annual Report

Achievements

Enforcement

The Commission used its powers to ban offer documents and take other actions to address bad practice in the primary markets. It took public enforcement actions which gave clear signals to the market about compliance with the law and clarified the standards of behaviour expected in the markets.

Finance companies

The Commission took preventative action in respect of several finance companies in distress to give formal consents to the Registrar of Companies (under the Corporations (Investigation and Management) Act) to preserve the interests of the companies' members and creditors.

The Commission required directors of all non-bank deposit takers to provide signed statements certifying that their prospectuses were up-to-date and not misleading. It took enforcement action to cancel the prospectuses of two finance companies, Bridgecorp Limited and Bridgecorp Investments Limited, following earlier suspensions of the prospectuses. The Commission notified two other finance companies that it was considering cancelling their prospectuses and both withdrew their prospectuses without requiring formal orders.

Other issuers

Three issuers withdrew offers of securities voluntarily after the Commission raised compliance issues with them. Several other issuers withdrew and/or agreed to amend future advertising of securities. No formal action was required in these cases as the issuers voluntarily complied with our requests and took appropriate steps to repay and/or fully inform investors.

Insider trading - Tranz Rail case

Following the successful settlement of this case in June 2007 the Commission sought orders from the High Court for distribution of the $29 million recovered. The Court gave orders in March 2008 for distribution of around twothirds of the settlement money. The Commission is seeking further directions for payment of the remainder. The Court has also ordered payment of the Commission's costs, amounting to around $2 million. This money will go to the Commission's litigation fund and will be available for future enforcement work.

Contributory mortgages

The Commission appointed Crichton Horne & Associates Mortgage Brokers Limited to manage the mortgages of New Zealand Commercial Mortgage Brokers Limited, Harts Contributory Mortgages Limited (previously Reeves Moses Hudig Mortgage Brokers Limited), and General Mortgage Limited in 2001, 2002 and 2003 respectively. These appointments related to 46 mortgages in which people had invested some $82 million. Almost all principal and interest has now been recovered for investors from 40 of the mortgages, and recovery of principal for the remaining six mortgages ranged between 22% and 91%. Crichton Horne took legal action against some directors of the contributory mortgage broking firms and valuers who valued the properties. They also managed the full recovery of principal and interest on the $27 million Parliament Street mortgage offered by the Mortgage Financier Limited referred to them in 2002.