OSC ac­cepts $11M Home Cap­i­tal set­tle­ment

In­vestors weren’t told quickly about fraud­u­lent ac­tiv­i­ties of some bro­kers

The Hamilton Spectator - - BUSINESS -

TORONTO — On­tario’s se­cu­ri­ties watch­dog ap­proved a set­tle­ment Wed­nes­day with Home Cap­i­tal Group Inc. and three former ex­ec­u­tives who failed to tell in­vestors quickly and com­pletely about fraud­u­lent ac­tiv­ity by some mort­gage bro­kers as­so­ci­ated with the al­ter­na­tive lender.

As a re­sult of the set­tle­ment, about $11 mil­lion could flow through the On­tario Se­cu­ri­ties Com­mis­sion to share­hold­ers cov­ered by a re­lated class-ac­tion suit that’s await­ing court ap­proval.

The agree­ment is con­di­tional on the On­tario Su­pe­rior Court ac­cept­ing a set­tle­ment worth about $29.5 mil­lion in­clud­ing the money avail­able through the OSC process.

An OSC lawyer told a hear­ing the com­mis­sion needed to send a clear mes­sage that pub­lic com­pa­nies are legally ob­li­gated to dis­close im­por­tant in­for­ma­tion quickly and in a form in­vestors can use.

Lawyers for the com­pany and three men said lit­tle dur­ing the 90-minute hear­ing, ex­cept to point out their clients had kept Home Cap­i­tal’s board in­formed and re­ceived out­side pro­fes­sional ad­vice about their dis­clo­sure re­quire­ments.

But OSC vice-chair Grant Vin­goe, who read out the three-mem­ber panel’s de­ci­sion, said a pub­lic com­pany’s dis­clo­sure of ma­te­rial changes “is not a dis­cre­tionary de­ci­sion from man­age­ment, but a reg­u­la­tory re­quire­ment and a pub­lic re­spon­si­bil­ity.”

He said Home Cap­i­tal failed to re­veal the ter­mi­na­tion of the bro­ker­age agree­ments — rep­re­sent­ing about 10 per cent of Home Cap­i­tal’s 2014 mort­gage orig­i­na­tions — un­til mid-2015, more than two months later than it should have.

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