Battery maker settles with regulator over inaccurate information

The Ontario Securities TORONTO Commission has reached a settlement agreement with Electrovaya Inc., a Canadian lithium-ion battery maker, that will see its chief executive officer pay a $250,000 penalty and the appointment of an independent chair of the board.

According to the settlement agreement released by the OSC on Friday, the Mississauga, Ont.based company issued unbalanced news releases that were “contrary to the public interest” and failed to update forward-looking statements and provide accurate descriptions of its business, putting it at odds with securities law.

While the company itself won’t face a financial penalty, chief executive Sankar Das Gupta has agreed to pay an administrative penalty of $250,000 and the cost of a consultant review of the company’s corporate governance, as well as take a course on proper disclosure.

“Electrovaya and Dr. Das Gupta are committed to meeting corporate disclosure standards and regret that they did not satisfy such standards,” Electrovaya said in a statement released Friday morning. “As a result of the inquiry by OSC staff, the company has already taken steps to improve its continuous disclosure.”

According to agreed facts outli di h l ment, Das Gupta, who was the chair of its board of directors and the disclosure committee, failed to comply with Ontario securities law by “authorizing, permitting or acquiescing in Electrovaya’s noncompliance.”

OSC staff conducted a disclosure review in 2015, which found five press releases that made significant positive announcements were unbalanced. OSC staff said that “most” of the statements implied significant revenue potential for the company but failed to contain an “adequate discussion of risks, contingencies or barriers to crystallizing the arrangements.” Some of the press releases did not provide sufficient details for investors to understand the nature of opportunity and whether it could be realized.

“In some cases, the initiatives represented non-binding letters of intent, rather than non-cancellable contracts, which made the initial announcements incomplete in the absence of other disclosure outlining the risks, contingencies and barriers involved in realizing these amounts,” reads the settlement agreement.

“When events occurred which made it likely that the contracts and revenue opportunities … would not transpire (such as the potential customer’s decision not to proceed with the arrangement) h f il d id d