The Commerce Commission has found Forsyth Barr was "misleading and deceptive" in promoting a product called Credit SaILS, which failed in 2008.
Three thousand investors, many of whom are now over the age of 70, invested a minimum of $5000.
Forsyth Barr is one of the companies involved in selling shares in Mighty River Power.
The investigation found many people invested because the product offered "capital protection", which investors took to mean any risk would be on the interest not the capital. That was not the case.
It also found Credit SaILS was a highly complex product unsuitable for retail investors, and that the companies, Forsyth Barr and Calyon, ought to have known this.
The companies received $91.5 million through the offer. The product failed in 2008, resulting in a $70 million loss.
Last year the Commerce Commission prepared to prosecute Forsyth Barr Ltd, Forsyth Barr Group Ltd, Credit Agricole Corporate and Investment Bank, Credit Sail Ltd and Calyon Hong Kong Ltd.
Faced with prosecution, the companies have paid a $60 million settlement.
Investors will now be offered around 85% of their investment back. If they accept it they will forego the right to pursue court action.
When asked if the Commerce Commission had a message for the 100,000 people who have pre-registered in Mighty River Power shares, chairman Mark Berry said the prospectus needs to be accurate and should disclose all key terms upfront.
The Commission says investors seldom read through the first few pages of an investment statement.
It wouldn't be drawn on how confident investors can be in Forsyth Barr after this investigation.
None of the companies have admitted liability and do not accept the Commission's view on these matters.
3 News
source: newshub archive
