Finance company director gets home detention

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The director of a failed finance company, which went into receivership owing investors more than $15 million, was today sentenced to a year's home detention.

Brian Clegg, director of failed finance company Clegg and Co Finance Limited (In Receivership), had earlier pleaded guilty to six charges under the Companies Act and the Securities Act, and appeared in Auckland District Court for sentence.

Clegg was sentenced to home detention on five charges, and convicted and discharged on one charge.

Registrar of Companies Neville Harris said after the sentencing that a number of the charges related to false and misleading statements made in the company's 2005 and 2006 prospectuses and to the company's trustee.

"A separate charge relates to misleading or deceiving the Securities Commission," he said.

The National Enforcement Unit of the Companies Office began its investigation after the matter was referred to it by the Securities Commission.

Clegg and Co Finance Limited went into receivership on October 4, 2007. At the time the total balance owing to investors was more than $15 million.

Mr Harris said anticipated returns to investors were between 55 and 60 cents in the dollar.

The charges Clegg pleaded guilty to were:

* Two charges under section 58 of the Securities Act 1978 for providing false information in the company's 2005 and 2006 prospectuses. The company advised in these prospectuses that it had complied with the requirements of the related party requirements set out in its Trust Deed, when it had not.

* Three charges under section 377 of the Companies Act 1993 for providing false information in relation to the extent of related party lending in reports provided to the trustee, Covenant Trustee Company Ltd.

* One charge under section 59A of the Securities Act 1978 for misleading the Securities Commission about the true financial position of the company. He was convicted and discharged on this count.

- NZPA