The Financial Services Authority (FSA) has publicly censured Cattles and its subsidiary Welcome Financial Services for publishing misleading information to investors about the credit quality of the latter's loan book.
James Corr, sub-prime lender Cattles' finance director, and Peter Miller, Welcome's finance director, have also been fined £400,000 and £200,000 respectively and banned from performing any functions in relation to any FSA regulated activities.
Meanwhile, John Blake, Welcome's managing director, has been fined £100,000, although his case has been referred to the Upper Tribunal.
The FSA said Cattles' 2007 annual report contained highly misleading arrears, impairment and profit figures, stating that only £0.9bn of Welcome's £3bn loan book was in arrears, when if accounting standards had been properly applied the correct figure would have been about £1.5bn.
Cattles also announced a pre-tax profit of £165.2m for 2007, although if accounting standards had been correctly applied Cattles would have suffered a pre-tax loss of £96.5m.
These misleading figures were also included in a rights issue prospectus Cattles released to potential investors in April 2008, giving misleading impressions of the firm's financial health.
It meant Cattles breached the Listing Principles by failing to act with integrity towards its shareholders and potential shareholders, and failing to communicate information in such a way as to avoid the creation or continuation of a false market.
Meanwhile, Welcome breached Principle 3 of the FSA Principles for Businesses by failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
Tracey McDermott, the FSA's acting director of enforcement and financial crime, said: "The consequences for shareholders of the misleading statements issued by Cattles and Welcome have been devastating.
"These directors failed to act with integrity in discharging their responsibilities. They failed in their obligations to shareholders, the wider market and the regulator.
"In order for markets to function properly, information given to investors must be accurate. Directors of listed companies must act with integrity and exercise appropriate diligence when making disclosures to the market. They should note the personal consequences for those who fail to meet our requirements."
The 2008 Cattles rights issue raised £200m, although when the true state of its loan book emerged in 2009, trading in its shares were suspended.
On 2 March last year Cattles announced a scheme of arrangement under which its shareholders would receive only 1p for each share, compared with a rights issue price of £1.28.
String of Neptune exits
Brexit three years on
Equality and inclusion
Managers fear for sector's reputation