Its decision comes a year after the FMA's predecessor, the Securities Commission, gained a court order freezing the New Zealand assets of Hanover founder Mark Hotchin pending it laying charges against him. It is the first and only such order.

The Serious Fraud Office has also been investigating Hanover's affairs since September 2010 but hasn't laid any charges yet.

The FMA says it expects to file a claim in 2012 – no more precise date was provided – against those who signed the prospectuses issued by Hanover Finance, Hanover Capital and United Finance “seeking pecuniary penalty orders and compensation for investors.”

“This has been a significant investigation for FMA, focusing on a period in which investor deposits totalled approximately $35 million,” says FMA chief executive Sean Hughes.

“We have now reached a point in the investigation where we are confident that we have good grounds to commence civil proceedings. We believe this is the most effective regulatory response and we’re confident it offers the greatest opportunity for success,” Hughes says.

If the FMA's succeeds in making its charges stick, it may help other parties to bring related claims and is examining avenues to seek compensation from other parties on behalf of aggrieved investors, he says.

“Given the public interest in the investigation we want to keep the market as informed as we can. The decision is also in line with FMA’s Enforcement Policy, allowing it to bring proceedings promptly and cost effectively and to go beyond directors when considering liability.”

The Securities Commission had said it would lay charges relating to Hanover before the end of 2010.

Hanover froze more than $550 million owed about 16,000 debenture holders in July 2008 and then engineered a debt-for-equity swap in December 2009 which saw those investors become shareholders of Allied Farmers. The latter's market capitalisation is now just $3.2 million.