TORONTO \u2013 June 14, 2017 \u2013 Home Capital Group Inc. (\u201cHome Capital\u201d) is pleased to\u00a0announce it has reached two agreements which together comprise a global settlement with the\u00a0Ontario Securities Commission (the \u201cCommission\u201d) and with respect to the putative class action\u00a0commenced in February 2017 by Claire R. McDonald, Action No. 349\/17CP (the \u201cClass Action\u201d)\u00a0relating to allegations of misleading disclosure. The settlements are subject to approval (by the\u00a0Commission and by the Ontario Superior Court of Justice respectively) and each settlement is\u00a0conditional upon the approval of the other. The main terms of the two settlements for which\u00a0approval is being sought are set out below. It is expected that full copies of both agreements\u00a0will be publicly filed if both agreements receive final approval. Home Capital expects to fund\u00a0substantially all of the costs of such settlements through available liability insurance.<\/p>\n
Under its proposed settlement with the Commission, Home Capital will make a payment of $10\u00a0million and reimburse Commission costs in the amount of $500,000. Gerald Soloway\u00a0(\u201cSoloway\u201d) will be reprimanded, prohibited from acting as a director or officer of any reporting\u00a0issuer for a period of four years and pay an administrative penalty in the amount of $1 million.\u00a0Each of Robert Morton (\u201cMorton\u201d) and Martin Reid (\u201cReid\u201d) will be reprimanded, prohibited from\u00a0acting as a director or officer of any reporting issuer for a period of 2 years and pay an\u00a0administrative penalty in the amount of $500,000.<\/p>\n
Of the $12 million (other than costs) being paid by the respondents in the Commission\u00a0Settlement, $10 million will be paid by Home Capital directly for the benefit of Home Capital\u00a0investors who comprise the proposed class in the Class Action (the \u201cClass\u201d). $2 million will be\u00a0paid to the Commission. Staff of the Commission will recommend that $1 million be allocated to\u00a0the Class and the remaining $1 million be allocated or used by the Commission in accordance\u00a0with the Securities Act.<\/p>\n
Home Capital will make a payment of $29.5 million to be distributed (net of costs and other\u00a0expenses) to the Class as defined in the Class Action, all subject to the approval of the Superior\u00a0Court of Justice as to certification of the Class for settlement purposes (as well as leave under\u00a0the Securities Act) and after notice to the Class of the proposed settlement, review and approval\u00a0of the settlement by the Court. The $29.5 million includes $11 million of the payments being\u00a0made 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\u00a0plaintiff in respect of the $11 million being paid in the Commission Settlement.<\/p>\n
The Commission has issued a Notice of Hearing for a date to be set by the Commission, at\u00a0which time the Commission will consider whether it is in the public interest to approve and give\u00a0effect to the settlement agreement by making certain orders against Home Capital, Soloway,\u00a0Morton and Reid as described therein.\u00a0The parties to the Class Action are in the process of obtaining a date for the initial court hearing.<\/p>\n
Brenda Eprile, Chair of the Home Capital Board, stated that \u201cThese settlements will enable us to\u00a0move forward with regaining the confidence of our depositors and shareholders and creating\u00a0value for all our stakeholders.\u201d She noted, as indicated below, \u201cHome Capital will accept full\u00a0responsibility for failing to meet its disclosure obligations to the marketplace and appreciates the\u00a0importance of the serious concerns raised by the Commission with respect to continuous and\u00a0timely disclosure.\u201d Eprile continued, \u201cThe Company also acknowledges that the Commission is\u00a0not to blame for the events of recent months involving its liquidity position.\u201d Upon final approval\u00a0by both the Commission and the Ontario Superior Court of Justice, Home Capital believes that it\u00a0will have taken full and appropriate responsibility for this matter.<\/p>\n
Pursuant to the terms of the settlement agreement with the Commission, Home Capital will not\u00a0be making any further statements on this matter outside of the approval proceedings.<\/p>\n
This press release contains forward-looking information within the meaning of applicable\u00a0Canadian securities legislation. Please refer to the Home Capital\u2019s 2016 Annual Report,\u00a0available on Home Capital\u2019s website at www.homecapital.com, and on the Canadian Securities\u00a0Administrators\u2019 website at www.sedar.com, for Home Capital\u2019s Caution Regarding Forwardlooking\u00a0Statements.<\/p>\n
Home Capital Group Inc. is a public company, traded on the Toronto Stock Exchange (HCG),\u00a0operating through its principal subsidiary, Home Trust Company. Home Trust is a federally\u00a0regulated trust company offering residential and non-residential mortgage lending, securitization\u00a0of insured residential mortgage products, consumer lending and credit card services. In\u00a0addition, Home Trust offers deposits via brokers and financial planners, and through its direct to\u00a0consumer deposit brand, Oaken Financial. Home Trust also conducts business through its\u00a0wholly owned subsidiary, Home Bank. Licensed to conduct business across Canada, Home\u00a0Trust has offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.<\/p>\n
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