Four directors of Lombard Finance and Investments have been found guilty on charges of making false statements in a prospectus and other documents issued before the company's collapse.
Former Cabinet ministers Sir Douglas Graham and Bill Jeffries, and business colleagues Michael Reeves and Lawrence Bryant, have been on trial in the Wellington High Court since October last year.
The charges were laid in 2010 and arose from statements made in a 2007 prospectus and other documents issued by Lombard Finance and Investments Ltd (LFIL).
The company subsequently collapsed in 2008, leaving 4400 investors $127 million out of pocket.
The Crown said the Lombard directors misled investors in the 2007 prospectus, an investment statement and advertising material.
In a decision delivered on Friday morning, Justice Dobson said the published prospectus failed to give investors an accurate picture of Lombard Finance's liquidity risks.
"Readers of the offer documents in late December 2007 and thereafter would be likely to see the liquidity risk associated with investing in LFIL materially differently if the extent of the company's concerns, plus the downwards trend in cash, had been described to them."
The judge said while the directors may have genuinely believed in the accuracy of the documents, they had not shown that it was reasonable for them to omit that information from the prospectus.
Justice Dobson found all men guilty of some parts of four of the charges laid against them, and not guilty on a fifth charge regarding to information contained on a DVD.
Crown prosecutor Colin Carruthers, QC, indicated he would seek jail terms for the men, but Justice Dobson said he had in mind a community-based sentence. He has ordered reports relating to home detention.
Graham, Jeffries, Reeves and Bryant were remanded until their sentencing on 29 March.
Paul Davison, QC, who represented Graham and Bryant, said he would start the process of looking at whether to lodge an appeal.
Verdict acknowledges honesty - defence
Outside the court, Paul Davison said the verdict acknowledged the men's honesty and integrity in the way they managed Lombard Finance.
However, he said the men were disappointed at the outcome.
"They were hopeful that the evidence that they had given and the case that they had presented would satisfy the judge and the court that they not only believed the documents to be true and correct in what they said, and that there were no material omissions, but also that they had a reasonable basis for that belief."
However, Mr Davison said it had been made clear that Lombard Finance was not managed or operated in a way that was intentionally misleading in any way whatsoever.
Investor wants assets surrendered
Outside court on Friday, Lombard investor Paul Wah said he wanted justice, but felt there would be none from the convictions.
Mr Wah said he did not want to see the men go to prison or forced into demeaning community service, but would like to see Douglas Graham's knighthood, his assets, and those of the other men stripped.
Mr Wah said he would join a class action if one can be mounted as a result of the convictions.
"What I would like to see is for their assets to be surrendered in compensation and that would partly alleviate the stress that a lot of the older investors have had to endure."
Paul Wah said Lombard Finance was the only company he considered worthy of investing in, and felt he should be able to entrust his money with men with impeccable records such as Graham's.