OSC Approves Settlement Agreement with Home Capital Group Inc., Gerald Soloway, Robert Morton and Martin Reid in Relation to Disclosure Violations
For Immediate Release OSC Enforcement
TORONTO – The Ontario Securities Commission (OSC) today approved a settlement agreement with Home Capital Group Inc. (Home Capital), Gerald Soloway, Robert Morton and Martin Reid, in connection with the company’s failure to comply with its continuous disclosure obligations, including making misleading statements to its investors.
The settlement agreement follows allegations by OSC Staff that Home Capital made materially misleading statements in its Q1 2015 Interim Filing about the causes of a decline in new mortgage originations and that Soloway, Morton and Reid authorized, permitted or acquiesced in such conduct. Staff also alleged that Home Capital and Soloway made misleading statements on a May 7, 2015 earnings call.
“If public companies are aware of events that impact the performance of their business, they must disclose that information to investors, and they must do so in a manner that is not misleading,” said Huston Loke, Director of Corporate Finance at the OSC. “Disclosure requirements are a cornerstone of our investor protection regime and are essential to fair and efficient markets. When companies or their management fail to comply, we will take action.”
Home Capital has also entered into a settlement agreement with respect to a putative class action. Each settlement is conditional upon the approval of the other.
As part of its settlement with the OSC, Home Capital has undertaken to pay $10 million for the benefit of investors and agreed that no legal fees or expenses will be deducted. Home Capital has also agreed to conduct a review of its continuous disclosure practices and deliver a report to its board and to OSC staff within one year. The company has also agreed to pay $500,000 in costs.
Soloway will pay an administrative penalty of $1 million and will be prohibited from becoming or acting as an officer or director of a reporting issuer for four years. Each of Morton and Reid will pay an administrative penalty of $500,000 and will be prohibited from becoming or acting as an officer or director of a reporting issuer for two years. Staff will recommend that $1 million of the $2 million in administrative penalties ordered against the individual respondents be allocated for the benefit of investors.
A total of $11 million will be paid to investors as a result of the settlement with the OSC.
The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in the capital markets. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at www.osc.ca.
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