Home Capital shares tumble after OSC launches proceedings against firm, executives
Allegations stem from company's disclosure involving scandal over falsified loan applications.
Home Capital Group Inc. shares touched a one-year low on Thursday, a day after the Ontario Securities Commission launched proceedings against the Toronto-based mortgage lender and some of its current and former executives.
On the TSX, Home Capital's shares fell more than 20 per cent, dropping $4.61 to close at at $17.71. Shortly before the end of the trading day, the stock reached a new 52-week low of $17.43.
- OSC alleges Home Capital, former CEOs, current CFO, broke securities law
- Home Capital shares dive after company terminates CEO
In a notice of hearing and statement of allegations issued Wednesday evening, the provincial securities regulator names the company and former chief executives Gerald Soloway and Martin Reid, along with Robert Morton, who is still chief financial officer at the firm.
The OSC alleges the company mishandled a scandal involving falsified loan applications.
In February, Home Capital said it had received an enforcement notice from the Ontario Securities Commission related to its disclosure in 2014 and 2015 about the impact of the company's findings that income information submitted on some loan applications had been falsified, and its subsequent move to suspend some brokers and brokerages.
The regulator is now alleging Soloway and Morton certified financial statements that did not set out the material facts known to the company and the two men at the time. Soloway and Reid also made statements on a 2015 conference call that were materially misleading or untrue, staff alleged.
The OSC's allegations have not been proven at a hearing. The regulator is seeking to prevent the three men from acting as corporate officers or directors, and it wants them and the firm to pay penalties.
In response, Home Capital said it believes it satisfied disclosure requirements and vowed to defend itself against the allegations.
"Home Capital remains focused on serving our customers, carrying on our business and executing on our strategy of creating prudent, profitable growth," Kevin Smith, chairman of the Home Capital board of directors, said in the statement.
"Because this is a regulatory matter, we will not be commenting further on the OSC proceeding at this time."
with files from The Canadian Press