Home Capital and the OSC

Re: Home Capital didn’t fall — it was pushed, Terry Corcoran, May 2.

I was pleased to see someone finally call out the Ontario Securities Commission for their despicable role in destroying Home Capital. Their ham-handed approach to dealing with a minor regulatory issue is just one more example of the overregulated level of Canadian capital markets. I trust we will see a class-action suit instituted against the OSC for destroying shareholder value when it is supposed to be our great protector. Who are the faceless individuals at the OSC who caused this disaster? Are they to be fired? Ross D. Lawrence, Toronto

Was the OSC responsible for pushing Home Capital off a cliff as Corcoran suggests? Let us suppose the OSC statement of allegations is correct and the company failed to disclose material information. The OSC must do its job but did it need to come to this? If everyone was truly interested in protecting shareholders there must have been some deal that would satisfy both the OSC and the company. Sadly such a deal was not reached and a billion dollars of market cap disappeared, some of which was mine. Could a settlement have been reached that would that have avoided a public spectacle? I wish I knew the answer. Fred Cranston, Hamilton, Ont.

Wow – talk about slamming the good guys ( OSC) who are doing their job for once. You only need to move to the article next to yours where the Equitable CEO virtually says he would not touch their mortgages with the proverbial pole. These guys only exist to take on the mortgages the “Big Banks” feel are “not in their risk profile.” Tip of the iceberg anyone? George Bradley, Montreal

Terence poses the same question that has been bugging me regarding the Home Capital debacle: why, nearly two years after the mortgage broker issue was disclosed and dealt with, does the issue become big enough to bring the company to its knees?

Personally, I think the OSC displayed a total lack of understanding as to how critical confidence is to a financial institution or they were in bed with the short sellers.

Regardless, the OSC needs to be held to account for their actions that will probably lead to the failure of a perfectly sound company.

So much for regulators! Phil Pardo, Stony Plain, Alberta Some commentators seem to be enthralled with the results of the action of the Ontario Securities Commission against Home Capital. I think the shareholders are less than pleased. If the OSC’s mandate is to protect shareholders they certainly haven’t achieved that for the investor’s Home Capital share price.

The OSC chose to announce actions against some of the management of Home Capital although no harm or potential harm has befallen shareholders. The long ago delay in announcing the untrustworthiness of some of the counterparties in Home Capital’s business did not diminish the value of the company and the company did take steps to severe ties with the untrustworthy suppliers. What can be said to have diminished the value of the company’s shares was the withdrawal of half a billion dollar of financing in the form of GIC’s redeemed as a result of the OSC’s announcement and the publicity accorded that announcement.

There will be more repercussions from the OSC’s actions besides the pain inflicted on Home Capital shareholders. Amongst those you can expect fewer participants in the subprime mortgage business and more difficulty for Ontarians with less than stellar balance sheets being able to purchase homes. As well, it is not unlikely that the debacle started by the OSC could lead to a collapse in bank share prices and thus the whole Canadian stock market. With that in mind and the destruction of hundreds of millions of dollars of Home Capital shareholder value, I would like to hear how the Ontario Securities Commission believes that its actions against Home Capital’s executives serves the public interest it is charged with upholding. Alex Doulis, Toronto