Mortgage lender Home Capital Group said several of its current and former executives have been served with enforcement notices from the Ontario Securities Commission.Kevin Van Paassen/The Globe and Mail
Mortgage lender Home Capital Group says several of its current and former executives have been served with enforcement notices from the Ontario Securities Commission over the company's disclosure of its investigation into fraudulent mortgage documents.
The financial services company – the largest firm in Canada that specializes in loans to homeowners who cannot qualify for a conventional bank loan – said last month that the OSC had issued it an enforcement notice. The notice stems from the way in which the company revealed to investors that it had suspended 45 mortgage brokers for submitting fake or altered income verification documents in 2014 and 2015.
The new notices mean OSC investigators are targeting not only the company, but also senior officials within it. Home Capital declined to name the directors and officers involved, but said the OSC notice against them related to the company's disclosure of its mortgage fraud investigation as well as "trades in the company's shares."
"As previously stated, the company believes that its disclosure satisfied applicable disclosure requirements," Home Capital said in a press release.
OSC spokesperson Kristen Rose declined to elaborate on the allegations against Home Capital and some of its executives. The notices are the first step in the regulator's enforcement process. The company and the executives and directors are now given time to provide additional information for the regulator to consider before deciding whether to start disciplinary proceedings.
Last month, law firm Siskinds LLP filed a proposed class-action lawsuit on behalf of investors against Home Capital and some of its current and former executives, alleging the company failed to properly disclose the suspension of several brokers in late 2014 and early 2015.
Home Capital said it believed the lawsuit was "unfounded and intends to vigorously defend the claim."
The company has struggled to recover from the fallout of its mortgage fraud revelations. Its shares closed at $27.74 on Tuesday, more than 40 per cent below its 52-week high of $39.60 and well below its peak of $55 in 2014.
Tamsin McMahon