Home Capital to pay $30.5M to settle OSC and class-action matters
A sign for the Ontario Securities Commission in Toronto is pictured in this file photo. (CP PHOTO/Aaron Harris)
The Canadian Press
Published Wednesday, June 14, 2017 7:33PM EDT
Last Updated Tuesday, June 20, 2017 10:26AM EDT
TORONTO -- Home Capital Group said it reached an agreement Wednesday to pay $30.5 million to settle Ontario Securities Commission and class-action lawsuit matters related to allegations of misleading disclosure.
"Home Capital will accept full responsibility for failing to meet its disclosure obligations to the marketplace and appreciates the importance of the serious concerns raised by the (OSC) with respect to continuous and timely disclosure," said Brenda Eprile, chair of the Home Capital Board, in a statement.
"These settlements will enable us to move forward with regaining the confidence of our depositors and shareholders and creating value for all our stakeholders."
In April, staff at the OSC alleged that three Home Capital executives broke the law in their handling of a scandal involving falsified loan applications several years ago. In 2015, the company severed ties with 45 brokers over the fraud allegations. Two of those brokers have been sanctioned by the Financial Services Commission of Ontario, while the other 43 have not.
Under terms of the proposed deal with the OSC, the embattled alternative mortgage lender will pay $10 million to settle with the provincial securities watchdog and reimburse it costs of $500,000.
Home Capital founder Gerald Soloway will pay an administrative penalty of $1 million and will be barred from acting as a director or officer of a public company for four years.
Former CFO Robert Morton and former CEO Martin Reid will each pay an administrative penalty of $500,000, and will be prohibited from acting as a director or officer of a public company for two years.
About $11 million of the payments being made to the OSC will go toward the $29.5-million, class-action settlement. The lawsuit, which is related to the allegations of misleading disclosure, was filed with the Ontario Superior Court of Justice in February and has yet to be certified.
Since the OSC allegations surfaced, Home Capital has been struggling to stay afloat as customers quickly pulled deposits. It has since secured a $2-billion lifeline from the Healthcare of Ontario Pension Plan.
This is a corrected story. A previous version incorrectly said Home Capital Group will pay 29.5 million to settle Ontario Securities Commission and class-action lawsuit matters. In fact, the total amount it $30.5 million.