LATEST: Former National Finance director Carol Braithwaite has been sentenced to 10 months home detention and 300 hours community work for misleading investors.
Braithwaite was found guilty by a jury in the High Court at Auckland in late July of making an untrue statement in the failed finance company's 2005 prospectus. The company went into receivership in May 2006 owing more than 2000 investors $24.8 million.
The case was the first finance company prosecution to be heard before a jury, rather than by a judge alone.
Justice Pamela Andrews said her starting point in sentencing Braithwaite was two years and eight months in prison, but she had given her a discount based on her good character and a letter Braithwaite sent to the court expressing remorse.
Braithwaite had also received a discount because she was the sole caregiver of an autistic child, the judge said.
In sentencing, Andrews said: "You were a director of National Finance yet failed to take even basic steps to ensure the information in the prospectus was true."
In victim impact statements, investors spoke of their financial and emotional lossses.
"They were typically retirees who lost a significant part of their income," Andrews said.
When considering sentencing it was useful to use the starting point in the sentences of directors of Nathans Finance, Bridgecorp and Lombard, she said.
"While the extent of loss to investors ranges widely... the nature of the offending was very similar."
The maximum sentence for the Securities Act offence is five years' imprisonment and fines of up to $300,000.
Crown lawyer Steven Symon said this morning that Braithwaite gravely abdicated her responsibilities to other directors, which amounted to "gross negligence."
"Unlike other cases, where directors asked questions or where they have beeen provided information and haven't critically evaluated the information, Braithwaite did not look," he said.
The prosecution was at odds with the defence about Braithwaite's remorse. "We find ourselves here today not with Braithwaite expressing remorse or a guilty plea."
The Crown argued that a starting point in her sentencing should be three years in prison, and that the mitigating factors relevant to her case weren't enough to amount to a non-custodial sentence.
Braithwaite's defence had argued that mitigating factors included her ignorance of the financial state of the company, her good character and the fact she doesn't have much money.
Her lawyer Arlan Arman said to characterise her offending as "gross negligence" required her to be aware of the standards expected of her - and she wasn't.
"Braithwaite was effectively a puppet of Ludlow," he said.
He thought an appropriate starting point was a sentence of between two and two-and-a-half years in prison, and that Braithwaite deserved a discount for her good character, remorse and personal circumstances. He submitted home detention would be suitable.
Braithwaite was looking after two children on the domestic purposes benefit, living in a rental home in Devenport and wouldn't be driving a Lamborghini after her sentence, he said.
"It would be a real stretch to say that other directors understand what that is like," he said.
She had lost significant investment in National Finance and understood the loss felt by other investors.
The Financial Markets Authority prosecuted Braithwaite. The authority's head of enforcement Belinda Moffat said the sentence highlighted the fact that directors were accountable for disclosure obligations and that they could not rely on what others tell them.
"All directors are responsible for having proper oversight and understanding of the business and its financial performance," she said.
- © Fairfax NZ News
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