Today, the NZ Herald reported:
That's correct... Anyone who makes investment recommendations, as John Banks has done with Huljich, is an investment adviser under the law and can be prosecuted as such for any misconduct.
That's incorrect... As an executive director of the company, Banks doesn't actually need to be aware of the misleading information. He only needs to have reckless disregard for his position and fail to ensure all advertisements are correct.
There's some evidence that shows Banks was aware that Huljich was in trouble when the false advertisements were made, and it was his job to ensure all advertisements (especially those with his photo on them) were not misleading investors.
In this way Banks' improbable ignorance is no excuse, and he only needed to allow misleading material to be published while he was a director to be guilty of committing a crime.
That hardly lets Banks off the hook. As a director of the company, he's liable under the law. With there being no reasonable grounds for him to believe that the misleading prospectus was correct, he's likely to be found guilty.
The fact that investors were misled is clear evidence of Banks' negligence as the executive director of Huljich Wealth Management. If his lawyer wants to argue that he was just a director at the time investors were misled, that won't change his liability under the law.
A guilty verdict would undoubtedly mean the end of Banks' political career... It could even mean a bit of time in jail, which in my opinion is where corrupt cretins like Banks and Brash belong.
A judge is considering whether Act Party leader John Banks should face charges this month for allegedly misleading investors.
The threat hung over Banks' head as he took the podium at yesterday's annual party conference.
Court papers supplied to the Herald on Sunday allege that because Banks was an executive director of finance firm Huljich Wealth Management, he has absolute liability for false statements in the company prospectus.
That's correct... Anyone who makes investment recommendations, as John Banks has done with Huljich, is an investment adviser under the law and can be prosecuted as such for any misconduct.
Prospective investors were not aware Huljich had injected his own money into the fund following losses made on investments he selected.
But a spokesman for Banks said last night that the Act leader could only be in breach of the Securities Act if it could be shown that the politician had been reckless, negligent or had known of the false claims in the prospectuses.
"Mr Banks can only be held liable for what he knew at the time."
That's incorrect... As an executive director of the company, Banks doesn't actually need to be aware of the misleading information. He only needs to have reckless disregard for his position and fail to ensure all advertisements are correct.
There's some evidence that shows Banks was aware that Huljich was in trouble when the false advertisements were made, and it was his job to ensure all advertisements (especially those with his photo on them) were not misleading investors.
In this way Banks' improbable ignorance is no excuse, and he only needed to allow misleading material to be published while he was a director to be guilty of committing a crime.
This newspaper has seen copies of the company's glossy prospectus that identified Banks as an executive director as recently as 2008.
But after concerns emerged about how the company was paying its returns to investors, the word "executive" was removed from in front of Banks' title on the website and in a subsequent prospectus.
That hardly lets Banks off the hook. As a director of the company, he's liable under the law. With there being no reasonable grounds for him to believe that the misleading prospectus was correct, he's likely to be found guilty.
When the judge considers the allegation, Banks' lawyers will argue that is irrelevant: that a director is a director under the Companies Act, and the word "executive" is legally irrelevant to his liability.
The fact that investors were misled is clear evidence of Banks' negligence as the executive director of Huljich Wealth Management. If his lawyer wants to argue that he was just a director at the time investors were misled, that won't change his liability under the law.
Banks, and former leader Don Brash, had until earlier this month to respond to papers filed in Wellington and Auckland district courts. The pair stand accused of making false statements in the prospectus.
A guilty verdict would undoubtedly mean the end of Banks' political career... It could even mean a bit of time in jail, which in my opinion is where corrupt cretins like Banks and Brash belong.
