TORONTO, June 14, 2017 /CNW/ - Home Capital Group
Inc. ("Home Capital") is pleased to announce it has reached two
agreements which together comprise a global settlement with the
Ontario Securities Commission (the "Commission") and with respect
to the putative class action commenced in February 2017 by Claire
R. McDonald, Action No. 349/17CP (the "Class Action")
relating to allegations of misleading disclosure. The
settlements are subject to approval (by the Commission and by the
Ontario Superior Court of Justice respectively) and each settlement
is conditional upon the approval of the other. The main terms
of the two settlements for which approval is being sought are set
out below. It is expected that full copies of both agreements
will be publicly filed if both agreements receive final
approval. Home Capital expects to fund substantially all of
the costs of such settlements through available liability
insurance.
Commission Settlement
Under its proposed settlement with the Commission, Home Capital
will make a payment of $10 million
and reimburse Commission costs in the amount of $500,000. Gerald
Soloway ("Soloway") will be reprimanded, prohibited from
acting as a director or officer of any reporting issuer for a
period of four years and pay an administrative penalty in the
amount of $1 million. Each of
Robert Morton ("Morton") and
Martin Reid ("Reid") will be
reprimanded, prohibited from acting as a director or officer of any
reporting issuer for a period of 2 years and pay an administrative
penalty in the amount of $500,000.
Of the $12 million (other than
costs) being paid by the respondents in the Commission Settlement,
$10 million will be paid by Home
Capital directly for the benefit of Home Capital investors who
comprise the proposed class in the Class Action (the "Class").
$2 million will be paid to the
Commission. Staff of the Commission will recommend that
$1 million be allocated to the Class
and the remaining $1 million be
allocated or used by the Commission in accordance with the
Securities Act.
Class Action Settlement
Home Capital will make a payment of $29.5 million to be distributed (net of
costs and other expenses) to the Class as defined in the Class
Action, all subject to the approval of the Superior Court of
Justice as to certification of the Class for settlement purposes
(as well as leave under the Securities Act) and after notice
to the Class of the proposed settlement, review and approval of the
settlement by the Court. The $29.5
million includes $11 million
of the payments being made in the Commission Settlement.
Releases of all defendants and dismissals in the usual form are
part of this settlement. There will be no deduction for legal fees
of counsel for the class plaintiff in respect of the $11 million being paid in the Commission
Settlement.
Approval Process
The Commission has issued a Notice of Hearing for a date
to be set by the Commission, at which time the Commission will
consider whether it is in the public interest to approve and give
effect to the settlement agreement by making certain orders against
Home Capital, Soloway, Morton and Reid as described therein.
The parties to the Class Action are in the process of obtaining
a date for the initial court hearing.
Company Statement
Brenda Eprile, Chair of the Home
Capital Board, stated that "These settlements will enable us to
move forward with regaining the confidence of our depositors and
shareholders and creating value for all our stakeholders." She
noted, as indicated below, "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." Eprile continued, "The Company also
acknowledges that the Commission is not to blame for the events of
recent months involving its liquidity position." Upon final
approval by both the Commission and the Ontario Superior Court of
Justice, Home Capital believes that it will have taken full and
appropriate responsibility for this matter.
Pursuant to the terms of the settlement agreement with the
Commission, Home Capital will not be making any further statements
on this matter outside of the approval proceedings.
Caution Regarding Forward-looking Statements
This press release contains forward-looking information within
the meaning of applicable Canadian securities legislation. Please
refer to the Home Capital's 2016 Annual Report, available on Home
Capital's website at www.homecapital.com, and on the Canadian
Securities Administrators' website at www.sedar.com, for Home
Capital's Caution Regarding Forward-looking Statements.
About Home Capital Group Inc.
Home Capital Group Inc. is a public company, traded on the Toronto
Stock Exchange (HCG), operating through its principal subsidiary,
Home Trust Company. Home Trust is a federally regulated trust
company offering residential and non-residential mortgage lending,
securitization of insured residential mortgage products, consumer
lending and credit card services. In addition, Home Trust offers
deposits via brokers and financial planners, and through its direct
to consumer deposit brand, Oaken Financial. Home Trust also
conducts business through its wholly owned subsidiary, Home Bank.
Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British
Columbia, Nova Scotia,
Quebec and Manitoba.
SOURCE Home Capital Group Inc.