Business

Home Capital says founder Gerald Soloway to leave board, CFO to change role

Home Capital Group Inc. said Monday that two people named in an Ontario Securities Commission action against the company will be moving out of their roles.

Move comes after Soloway, two others named in OSC action

Gerald Soloway, seen here speaking at Home Capital's annual general meeting in Toronto in May 2011, is stepping down from the company's board of directors after he and two other people were named in an OSC action. (Aaron Vincent Elkaim/Canadian Press)

Home Capital Group Inc. said Monday that two people named in an Ontario Securities Commission action against the company will be moving out of their roles.

The embattled mortgage lender said chief financial officer Robert Morton will shift out of that role after the company files its first-quarter results. The company said Morton will assume responsibilities for special projects outside the financial reporting group.

Robert Blowes, a former CFO at the company and a current member of its board of directors, will take over from Morton on an interim basis.

Home Capital also said Gerald Soloway, the founder and a former CEO of the company and now a member of its board, will step down when a replacement can be found. In the meantime, Soloway will stand for re-election at the firm's annual general meeting on May 11, the company said. 

A spokesman for the company said there is a list of candidates to replace Soloway, but materials for the annual shareholders meeting have already been mailed. Soloway will run for re-election and then resign when a replacement is found, the spokesman said.

"Mr. Soloway feels it is in the best interests of the company if he steps down as soon as the board has attracted a strong director with financial services expertise," the firm said in a release.

Ontario Securities Commission action

Morton, Soloway, and former CEO Martin Reid were named last week in an Ontario Securities Commission action. 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 regulator related to disclosures in 2014 and 2015. Those disclosures were about the company's findings that income information submitted on some loan applications had been falsified. Home Capital subsequently suspended 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, OSC staff alleged.

"We know that we have not met the full expectations of some of our valued stakeholders, which we deeply regret," Kevin Smith, the chair of Home Capital's board, said Monday in a statement.

"These changes will ultimately result in enhanced management and governance leadership, and bring valuable new perspectives to Home Capital," he said.

Shares of Home Capital fell more than nine per cent on the TSX, dropping $1.75 to hit $17.50.

With files from The Canadian Press

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