Lender to fund settlements through available liability insurance
Home Capital Group Inc. and three of its former executives have agreed to shell out over $30 million to reach settlements with regulators and investors over allegations of misleading shareholders about mortgage fraud.
Bloomberg reported that Home Capital and the executives will pay $12 million and shoulder $500,000 in costs to the Ontario Securities Commission. The lender added that it will make a $29.5 million payment to settle a class-action lawsuit filed after shares plunged, which includes $11 million paid in the proposed OSC deal.
Home Capital stated that almost all of the payments will be funded through available liability insurance.
As part of the settlement, founder and former CEO Gerald Soloway will be paying a $1 million penalty, and will be barred from acting as a company director for four years. Meanwhile, former executives Martin Reid and Robert Morton will pay $500,000 each to the commission, while being barred from directorship positions for two years.
“These settlements will enable us to move forward with regaining the confidence of our depositors and shareholders and creating value for all our stakeholders," Home Capital board chair Brenda Eprile said.
“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,” she explained.
The stock posted a 17 per cent gain on June 15, its largest since May 11.
The OSC has scheduled an August 9 hearing in Toronto to approve the settlement. Staff received approval to make the terms of the proposed settlement public before the hearing to prevent speculation in the market, according to OSC spokesperson Kristen Rose.
Bloomberg reported that Home Capital and the executives will pay $12 million and shoulder $500,000 in costs to the Ontario Securities Commission. The lender added that it will make a $29.5 million payment to settle a class-action lawsuit filed after shares plunged, which includes $11 million paid in the proposed OSC deal.
Home Capital stated that almost all of the payments will be funded through available liability insurance.
As part of the settlement, founder and former CEO Gerald Soloway will be paying a $1 million penalty, and will be barred from acting as a company director for four years. Meanwhile, former executives Martin Reid and Robert Morton will pay $500,000 each to the commission, while being barred from directorship positions for two years.
“These settlements will enable us to move forward with regaining the confidence of our depositors and shareholders and creating value for all our stakeholders," Home Capital board chair Brenda Eprile said.
“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,” she explained.
The stock posted a 17 per cent gain on June 15, its largest since May 11.
The OSC has scheduled an August 9 hearing in Toronto to approve the settlement. Staff received approval to make the terms of the proposed settlement public before the hearing to prevent speculation in the market, according to OSC spokesperson Kristen Rose.
