A securities law expert says the four Lombard Finance directors may have avoided guilty verdicts if the Financial Markets Conduct Bill had been in effect.
At the High Court at Wellington on Friday, Justice Dobson found former cabinet ministers Sir Douglas Graham and Bill Jeffries and their business colleagues Michael Reeves and Lawrence Bryant guilty on four charges of making a false statement to Lombard investors.
He also found them not guilty on the fifth charge they faced.
Lombard owed $127 million to about 4400 investors when it collapsed in April 2008.
The Crown said the men misled investors in a prospectus, an investment statement and advertising material.
Chapman Tripp partner Roger Wallis says the Lombard case is one of several in recent years to highlight the risks associated with being a director.
But Mr Wallis says things might have been different, had a proposed new law been in force.
He says the Financial Markets Conduct Bill states that it is only the most serious, deliberate, intentional misconduct that should trigger the criminal law when a company is preparing a prospectus.
Mr Wallis says that, on any view of what the judge has found, the Lombard case is not in that category.
He says it is very likely that if the bill had been in force, there would have been no criminal action over Lombard at all.
Mr Wallis says there could well have been a civil action, which would have focused on obtaining compensation for investors.
He says the bill will still ensure directors are held accountable for their decisions, but it should clear up grey areas.
Mr Wallis says it proposes what he believes is a more appropriate set of sanctions, focusing primarily on the civil law to recover compensation if there is a breach of the law, in all but the most serious cases of misconduct.
He says it will also impose a new set of duties on directors to ensure that they get it right.
While the consequence will not necessarily be the criminal law under the revised statute, it will not relax obligations to make full meaningful disclosure to investors in a prospectus.
He says the Securities Act is now more than 30 years old and needed a change.
The Lombard directors will be sentenced in March.