Securities Commission chairman Jane Diplock says the firm, which was headed by Bryn Vincent Evans and Jefferson John McIntyre, had about $20 million invested in contributory mortgages.

Diplock says NZCMB has had a hearing before the commission and the watchdog concluded that the business wasn't being appropriately run.

"We felt that they weren't managing the operation appropriately."

The commission considered that investors’ funds were at risk because the company has:

• continually failed to keep proper accounts
• failed to lodge an annual report with the Registrar of Companies.
• failed to tell investors about a significant change in the terms of a mortgage. One "significant" sized development mortgage was increased in size and changed to a general mortgage without the investors' knowledge.

As a result of the hearing the commission has removed Evans and McIntyre as directors of the broker's nominee company. It has appointed Christchurch chartered accountant David Crichton and Keiran Horne, directors to manage a work out, and it has made a prohibition order banning NZCMB from offering contributory mortgages to the public for five years.

Diplock says this is the first time the commission has taken such action.

However it may not be the last.

Diplock says nine of the 21 groups that offer contributory mortgages are currently before the commission for a variety of reasons.