BusinessDesk: All four Lombard Finance directors lodge appeals against convictions

BusinessDesk: All four Lombard Finance directors lodge appeals against convictions

All four directors of Lombard Finance & Investments will appeal their convictions and have lodged papers in the Court of Appeal.

The court has received papers from Sir Doug Graham, Bill Jeffries, Lawrie Bryant and Michael Reeves appealing their convictions, though no date has been set for a hearing. Jeffries was the only one of the four to indicate he would appeal the decision immediately after the guilty verdict.

Last month, all four men avoided prison sentences for misleading investors by signing off on offer documents that omitted material information about Lombard’s liquidity situation in late 2007, before its collapse in April 2008. Graham and Bryant each received 300 hours community service and would each pay $100,000 in reparation, while Jeffries and Reeves were sentenced to 400 hours community service. Reeves avoided a custodial sentence due to ill-health and family obligations.

At the time of sentencing, Justice Robert Dobson said the damage to the mens’ reputation of a criminal conviction couldn’t be underestimated, and that although the offending was serious, it was a far cry from other cases involving failed lenders, such as Bridgecorp and Nathans Finance.

After the verdict in February, Chapman Tripp partner Roger Wallis said the men may have avoided guilty verdicts if the Financial Markets Conduct Bill, currently in front of Parliament, had been in place at the time, as it “reserves criminal sanctions for misconduct which is deliberate and reckless.”

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We understand the technical legal crime was a faulty prospectus (which I also accept most of the investors in Lombard probably didn't read anyway). The real "crime" was of course the incompetence of losing 74cents of every dollar invested.  Even allowing receivership costs, they have probably lost 50%. In particular Jeffries, and to some extent Graham, exclusively blame the GFC. Just perhaps their risk management was very poor; they believed that property prices could only go up; and the business model never allowed for significant marketing and administrative overheads. The GFC just brought these issues to a head.
For all that I put Lombard's behaviour somewhat above many others- especially those that engaged in blatant related party transactions on a tails they win, heads you lose basis- even if some of those did sort of have that somewhere in their prospectuses. Not much of a concession, but probably says that public humiliation, a $100k fine, some community service and a meaningless knighthood even if it stays, are enough of a punishment.