Former HIH Insurance CFO Dominic Fodera will mount a “due diligence” defence after pleading not guilty in the NSW Supreme Court to a criminal charge of authorising the issue of a prospectus that had a material omission.

The Australian Securities and Investments Commission (ASIC) alleges that he authorised a material omission concerning a transaction between HIH and Societe Generale Australia Limited (SGAL).

ASIC alleges SGAL took up a priority allocation of about $35 million in notes in exchange for HIH depositing about $35 million with it.

Mr Fodera’s defence barrister, Graham Ellis, told the court he would be raising a “due diligence” defence against the charge. “There’s no doubt that the prospectus was issued and that the matter complained of was not in it,” he said.

A “due diligence” defence revolves around the defendant’s belief that he or she made all reasonable inquiries and after doing so, believed on reasonable grounds that a statement was not misleading or deceptive. In the case of an omission from the prospectus, the defendant would contend there was no omission in relation to the matter ASIC has raised.

Mr Fodera – who is also due in the Supreme Court next month on four criminal charges of giving misleading information and two charges of failing to act honestly as a director – will commence his trial for the charge in February.