WELLINGTON -(Dow Jones)- The New Zealand Securities Commission said Friday it has laid criminal charges and issued civil proceedings against four current and one former Capital + Merchant Finance Ltd. directors, alleging they misled investors.

The move is the result of extensive investigations after Capital + Merchant Finance went into receivership on Nov. 23, 2007, owing approximately NZ$167 million to some 7,000 investors, the Securities Commission said.

In its six-month receivers report dated late January, receivers Grant Thornton said debenture holders were unlikely to recover any of their investment.

More than 25 second-tier finance companies--which engage in lending, mostly to property developers--or investment funds have collapsed in New Zealand since May 2006, affecting investor funds worth around NZ$2.5 billion.

Criminal charges have been laid and civil proceedings issued against Neal Nicholls, Owen Tallentire, Colin Ryan and Robert Sutherland. Criminal charges have also been laid against Wayne Douglas, who resigned as a director in February 2007.

"The Commission alleges that Capital + Merchant Finance's offer documents and advertisement misled investors by misrepresenting the investment risks, especially in relation to related party lending, insurance cover and liquidity," said Securities Commission Chairman Jane Diplock in a statement.

Among other things, the commission alleges directors made untrue statements in the registered prospectus and investment statement in August 2006 and in September 2007 as well as untrue statements about liquidity and cashflow and in the prospectus incorrectly stated that no loans were impaired.

Most of the criminal charges carry a maximum penalty of five years imprisonment or fines of up to NZ$300,000. The civil proceedings could carry penalties of up to NZ$500,000.

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