Home Capital Group to Settle OSC, Class-action Matters
Home Capital Group has reached agreements with the Ontario Securities Commission (OSC) and with respect to a class-action lawsuit related to allegations of misleading disclosure.
In April, the OSC accused the mortgage lender and three of its current and former executives of breaching securities laws. And the class-action suit alleged that the company failed to make required disclosures regarding the termination of its relationships with certain mortgage brokers and brokerages in late 2014 and early 2015.
Read:FAQs About Home Capital Group
Under its proposed settlement with the OSC, Home Capital will make a payment of $10 million and cover $500,000 in OSC costs.
Home Capital founder and former CEO Gerald Soloway will be reprimanded, prohibited from acting as a director or officer of any reporting issuer for a period of four years, and pay an administrative penalty in the amount of $1 million.
Former CEO Robert Morton and former chief financial officer Martin Reid will both be reprimanded, prohibited from acting as a director or officer of any reporting issuer for a period of two years, and each pay an administrative penalty in the amount of $500,000.
The company will also pay $29.5 million—which includes $11 million of the payments being made in the OSC settlement—to settle the class-action lawsuit.
“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 Commission with respect to continuous and timely disclosure,” says Brenda Eprile, chair of the Home Capital board. “The company also acknowledges that the Commission is not to blame for the events of recent months involving its liquidity position.”
Home Capital expects to fund nearly all of the costs of the settlements through available liability insurance. The settlements are subject to approval and each one is conditional upon the approval of the other.
The OSC has scheduled a hearing on Aug. 9 to approve the settlement.
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