"If investigations identify little more than oversight or laxness by Hubbard, the Commission will face intense pressure to justify the severity of its recommended course of action," said Kidd in a note to clients that lamented the impact of losing the Hubbard empire's activities as an active investor in both NZX-listed stocks and the rural economy. 

"Equity capital access for New Zealand companies will inevitably suffer from this action," said Kidd, who feared the impact on the economic recovery if a loss of confidence in South Canterbury Finance - not part of the statutory management but in the throes of debt restructuring - were to cause its collapse. 

The "intense rumour, speculation and uncertainty" that would ensue until the statutory management announced on Sunday was resolved was also "precisely what the market - and particularly the finance company sector - does not need right now as it struggles to recover." 

"Along with the direct cost of appointing statutory managers, valuable Securities Commission, Companies Office and Serious Fraud Office resources will now be tied up for the next few weeks and months seeking to unearth evidence of criminal intent.  

"If it all comes to little or nothing, the Securities Commission will need to take a long, hard look at itself and ask how it justified the mobilisation of so much resource for so little reward when there remain numerous directors and executives of failed companies that are far more deserving of timely investigation and justice," Kidd said. 

"If Hubbard's actions are revealed as criminal and/or deceitful, many, many people (including us) will be shocked," he said. "If the Securities Commission has got it wrong and regulatory over-reaction is instead revealed, such will be the extent of unjustified, negative market impact that swords should be fallen upon." 

Hubbard's primary investment vehicle, Hubbard Churcher Trust Management, is "a very significant and active participant in the local equity markets with holdings in at least 75 of the 150 companies listed on the NZX."  

The firm had also been a "strong and consistent supporter of local early-stage companies - a layer of the local capital markets that is desperately thin."