Regulator pushes to ‘expedite’ Home Capital hearings

Lawyers arguing the Ontario Securities Commission’s case against Home Capital Group Inc. pushed to expedite the potentiallylengthy proceedings at an opening hearing Thursday.

However, legal counsel for Home Capital and some of its current and former executives accused of misleading disclosure say the vast number of documents to be reviewed and the number of potential witnesses proposed by the OSC will make speeding up the proceedings difficult.

On Thursday, the OSC held its first hearing since it filed formal allegations last month against Home Capital, founder and former chief executive Gerald M. Soloway, former chief executive Martin K. Reid and chief financial officer Robert Morton. None were present at the hearing at the OSC offices on Thursday.

The securities regulator has accused them of misleading shareholders, alleging they knew there was fraud in the firm’s mortgage broker channel months before it made public announcements about the problems in July 2015.

Jennifer Lynch, a litigator for the securities regulator, proposed commencing a hearing on the merits — in which the facts of the case would be argued in front of a panel of OSC commissioners — on July 14, or sometime in mid-July, which would be a faster than typical timeline. “We are also prepared to work with the respondents to expedite the process, to simplify the issues and to simplify number of days that are needed for a merits hearing,” she told OSC commissioner Janet Leiper on Thursday.

She added that OSC staff planned to submit certain items including its witness list and expert report by May 24. “In our opinion, there are few facts in this matter that are in dispute,” Lynch said.

Peter Howard, a lawyer with Stikeman Elliott in Toronto representing Home Capital, said the company was only told recently that the OSC is proposing to call between eight and 10 witnesses, whose names have not yet been revealed. “Speaking for us all, we welcome the idea to sit down and streamline matters ... but there’s a lot to do,” Howard said Thursday.

He also said “it’s disappointing that those submissions were not aimed at us but aimed at another audience.”

The proceedings were adjourned until June 2. A typical OSC proceeding can be a multi-year process and can often be delayed.

The OSC submitted allegations and a notice of hearing on April 19 in connection with the company’s disclosures following the discovery of falsified income information on some loan applications and its subsequent move to cut ties with 45 brokers in 2014 and 2015.

Home Capital has said that it “satisfied applicable disclosure requirements, and the allegations are without merit.”