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OSC alleges former Home Capital CEOs, current CFO broke securities law

Staff with Ontario’s securities regulator alleged on Wednesday that two former CEOs and the current CFO of Home Capital Group Inc. broke the law in their handling of a scandal involving falsified loan applications.The Ontario Securities Commission issued a notice of hearing and statement of allegations naming the company and former chief executives Gerald Soloway and Martin Reid. It also named Robert Morton, who is still CFO of the Toronto-based mortgage lender.The allegations were not entirely unexpected. Home Capital said in February that it received an enforcement notice indicating it was the preliminary conclusion of OSC staff that the company failed to meet its continuous disclosure obligations in 2014 and 2015. At the time, it was dealing with a scandal in which income information on some loan applications had been falsified, leading it to suspend some brokers.Read more:Home Capital defends mortgage practicesArticle Continued BelowBanks defend mortgage-verification practices in light of broker fraud allegationOn Wednesday, OSC staff made various allegations about how it said the company and the three men misled shareholders. They alleged 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, staff alleged.The OSC staff are seeking to prevent the men from acting as directors or officers. It also wants to make them and the company pay administrative penalties.

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