Toronto-based Home Capital Group Inc. announced on Wednesday that it has reached an agreement to pay $30.5 million to settle Ontario Securities Commission (OSC) and class-action lawsuit matters related to allegations of misleading disclosure.
"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 (OSC) with respect to continuous and timely disclosure," says Brenda Eprile, chairwoman of Home Capital, in a statement. "These settlements will enable us to move forward with regaining the confidence of our depositors and shareholders and creating value for all our stakeholders."
In April, staff at the OSC alleged that three Home Capital executives broke the law in their handling of a scandal involving falsified loan applications several years ago. In 2015, the company severed ties with 45 brokers over the fraud allegations. Two of those brokers have been sanctioned by the Financial Services Commission of Ontario, while the other 43 have not.
Under terms of the proposed deal, the embattled alternative mortgage lender will pay $10 million to settle with the provincial securities watchdog and reimburse it costs of $500,000.
Home Capital founder Gerald Soloway will pay an administrative penalty of $1 million and will be barred from acting as a director or officer of a public company for four years.
Former chief financial officer Robert Morton and former CEO Martin Reid will each pay an administrative penalty of $500,000 and will be prohibited from acting as a director or officer of a public company for two years.
About $11 million of the payments being made to the OSC will go toward the $29.5-million, class-action settlement. The lawsuit, which is related to the allegations of misleading disclosure, was filed with the Ontario Superior Court of Justice in February and has yet to be certified.
Since the OSC allegations surfaced, Home Capital has been struggling to stay afloat as customers quickly pulled deposits. It has since secured a $2-billion lifeline from the Healthcare of Ontario Pension Plan.
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