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Securitibank was not a listed company and many investors lost all their money. Its collapse led the National government to pass the Securities Act 1978 to ensure that people who invested had a registered prospectus with full and proper disclosure. It led to further securities legislation, including the policing of insider trading (where friends or associates of a company profit from inside information).
John George Russell was the head of Securitibank when it collasped and many New Zealanders lost their money. John George Russell skidded out of the limelight for a period after earning a place in the annals of New Zealand’s corporate history when merchant bank, Securitibank, with him on the helm, collapsed spectacularly in 1976. David Richwhite, Michael Fay and Rod Petricevic all spent time working at Securitibank before its collapse in 1976.
The founder of Bridgecorp Finance, which collapsed in 2007, was Rod Petricevic. He had worked for Securitibank, which crashed in 1976, and was a casualty of the failed investment bank, Euro-National Corporation, which was taken over in 1992. Petricevic was declared bankrupt in 2008. Petricevic started his career with Michael Fay and David Richwhite at the ill-fated Securitibank in the early 1970s. The three colleagues left Securitibank in the mid-1970s before it collapsed and formed the merchant bank Magnum Investments. They were young men about Auckland in the late 1970s from both a business and a social point of view.
The three split up in 1980 with Petricevic forming the high-risk merchant bank Euro-National and the other two establishing Fay, Richwhite & Co. Outside investors have lost money in virtually every company the three former colleagues have been involved in. Meanwhile, Petricevic was looking to develop a foothold in the finance company sector. He found this through a company called Bridgecorp Holdings. Bridgecorp was originally listed as Bridgevale Mining, then changed its name in 1987, took a controlling interest in the Toy Warehouse and was delisted in August 1992 after the underperforming toy operations were sold.
Petricevic effectively took control of Bridgecorp after it was delisted and Bruce Davidson, who was chairman of the company in its listed days, has remained in that position. Petricevic has tried a number of times to relist Bridgecorp but he has been rejected by the NZX. This reflects the cautious view that the established investment community has had of Petricevic and Bridgecorp as the NZX has been fairly keen to encourage new listings. In June 2002 Bridgecorp Holdings was deregistered in New Zealand and moved to Australia.
Two years later Bridgecorp Holdings' shares started trading on the New Zealand-based Unlisted trading facility at 20c. They reached a high of 55c in mid-2005. There has to be something wrong with a finance company when equity investors are only willing to purchase its parent company shares at a significant discount to net asset backing.
In March 2006 the group started reporting the results of Bridgecorp Limited, the New Zealand company that collapsed this week, to Unlisted when it was the shares of Bridgecorp Holdings, the parent company in Australia, that were trading on the platform.
This was an extraordinary development and Bridgecorp Holdings has not released any financial results to Unlisted since November 2005. This is a sign of extremely poor corporate governance and reflects badly on the level of disclosure available to investors who buy and sell shares on Unlisted.