Home Capital reaches settlement with OSC
Home Capital Group Inc. and three former executives agreed to pay more than $30 million to reach settlements with regulators and investors over allegations the Canadian lender misled shareholders about mortgage fraud. The stock posted its biggest gain in five weeks.
Home Capital and the executives will pay $12 million and cover $500,000 in costs to the Ontario Securities Commission (OSC), the Toronto-based lender said in a statement after market hours Wednesday. The firm is also making a $29.5-million payment to settle a class-action lawsuit filed after the shares plunged, which includes $11 million paid in the proposed OSC deal, according to the statement. Home Capital expects to fund almost all of this through available liability insurance.
As part of the settlement, founder and former CEO Gerald Soloway is barred from acting as a company director for four years and will pay a penalty of $1 million. Former executives Martin Reid and Robert Morton will pay $500,000 each to the commission and are barred from being directors for two years.
“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,” chair Brenda Eprile said.
Home Capital surged as much as 19 per cent in Toronto on Thursday, its biggest intraday gain since May 11. The stock has almost tripled from its lows last month, though is still down 56 per cent this year.