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Aug 9, 2017

The stakes for three former Home Capital execs as OSC approves settlement

Gerald Soloway, Robert Morton and Martin Reid

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The Ontario Securities Commission has approved its settlement agreements with three former Home Capital Group (HCG.TO) executives implicated in the company’s disclosure scandal.

Company founder and former Chief Executive Officer Gerald Soloway faced the stiffest penalty, agreeing – on a preliminary basis - to pay $1 million and accepting a four-year ban from acting as a director of a public company.

Former CEO Martin Reid (who was president at the time of the alleged infractions) and ex-Chief Financial Officer Robert Morton were hit with lesser penalties, both paying $500,000 and taking two-year prohibitions from acting as officers or directors.

Here’s more on how much the three former executives have riding on Home Capital’s future.

Gerald Soloway:

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Company founder Gerald Soloway has relinquished any and all formal roles at the firm, but remains the company’s fifth-largest shareholder (and largest individual owner) with a 4.4 per cent stake in the firm. At age 78, it’s likely that the four-year ban effectively ends his executive career entirely, after serving as chief executive officer from 1987 through 2016.

Martin Reid:

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There’s been nary a peep from the former chief executive officer of Home Capital since his unceremonious firing on March 28. Reid was shown the door less than a year after moving into Soloway’s vacated CEO role, as the company said in a curt release that Home Capital needed leadership that could bring in “renewed operational discipline, emphasis on risk management and controls, and focus on improving performance.” Reid’s most recent securities filing, from January of this year, indicated that he owned just shy of 45,000 shares in the company. His already-moribund Twitter account has gone cold, with only a pair of retweeted items since he was let go.

Robert Morton:

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Former CFO Robert Morton is the only one of the three who is still with Home Capital in some capacity. On April 24, Home Capital announced he was relinquishing his role as CFO, instead assigned to “special projects” outside the financial reporting group. It remains unclear what exactly those projects entail, but it did distance Morton from the books, as Robert Blowes took on the interim CFO role. Newly-minted Chief Executive Officer Yousry Bissada has yet to hire a full-time replacement. Morton has precious little skin in the game, with a January filing stating he held all of 2,700 shares.