Criminal charges decision on Hanover by Xmas

Regulator to decide on criminal charges against Hanover directors by Christmas

by Jonathan Underhill
Nov. 19 (BusinessDesk) – The Securities Commission says it will decide by Christmas whether to lay criminal charges after a major investigation into the directors of failed finance company Hanover Finance and its affiliates, United Finance and Hanover Capital.

Mark Hotchin and David Henry are the only two people listed as directors of the companies, which froze $554 million of funds owed to 16,000 investors in 2008 before convincing them to accept a moratorium on payments.

Ultimately the hapless investors have ended up with near-worthless stock in Allied Farmers after that firm’s decision to buy the Hotchin/Eric Watson group’s financial assets.

The commission this week laid criminal charges against Peter Huljich over alleged misrepresentations in offer documents, though no such allegations have been made publicly against the Hanover empire.

Allied Farmers yesterday said Hanover had effectively overstated valuations when it bought the loans that backed its debentures.

The commission is looking at Hanover as part of a broader review of failed finance companies that has political ramifications because of the number of consumers caught by failed finance companies and their distrust of the financial advisory infrastructure that dragged them in for fees, including brokerages, banks and insurers.

The commission has publicly talked of the investigation since at least April 2008. In that time it has conducted the investigation as firms failed, according to spokesman Roger Marwick.

“There has been increased public and media speculation as to the status of the SecuritiesCommission’s investigation into Hanover Finance,” the regulator said in a statement today.

It is completing an investigation into the finance group and “the investigation has been complex and involves a team including investigators, forensic accountants, financial analysts and lawyers,” it said in a statement posted on its website.

Commission members are to meet “before Christmas to decide whether criminal charges will be laid against directors of the companies,” it said. “Although no decision has yet been made, it is likely any charges will be laid in the new year.”

(BusinessDesk) 18:14:08

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