* Robert Blowes named interim CFO
* CFO to assume role outside financial reporting group
* Shares fall as much as 5.7 pct
(Adds shares, analyst's comment)
By Arathy S Nair
April 24 Canada's Home Capital Group Inc
said founder and former CEO Gerald Soloway will step
down from the board once a replacement is found, days after
regulators accused the company of making "materially misleading
statements" to investors.
Shares of Canada's biggest non-bank mortgage lender fell as
much as 5.7 percent to C$18.15 in morning trading.
The Ontario Securities Commission (OSC) on Wednesday issued
allegations against Soloway and another former Chief Executive
Officer Martin Reid and current Chief Financial Officer Robert
Home Capital on Monday said Morton "will assume
responsibilities for special projects outside the financial
reporting group" after the company files its first-quarter
Board member Robert Blowes, a former CFO, will assume the
CFO's role on an interim basis.
"These are important steps in rebuilding confidence and
putting the focus back on our profitable underlying business and
its solid performance," said Kevin Smith, chair of the company's
Home Capital said it had a short list of candidates, and
intends to identify a replacement for Soloway as soon as
Soloway will contest elections to the board at the annual
general meeting on May 11, Home Capital said.
Blowes, who was elected to the board in May 2015, will also
stand for re-election.
Home Capital also said Bank of Nova Scotia would
resume sales of Home Trust deposit products from Monday, subject
to a certain cap.
However, analysts flagged concerns about the stability of
the company's primary funding source, its guaranteed investment
"If HCG were to lose access to the bank boards, we believe
liquidity risk may become a serious concern," GMP Securities
analysts wrote in a note.
"We see this as the first sign the broker fraud and related
issues may materially impact operations."
Home Capital said on Friday it would defend itself against
allegations by regulators that it withheld information about
fraud by mortgage brokers.
The OSC has set a hearing on the matter for May 4.
In July 2015, the company said it had suspended contracts
with 45 independent mortgage brokers after an investigation
found they had falsified information about borrowers' incomes.
Reid's contract was terminated in March, and longtime
director Bonita Then was appointed to the role on an interim
The company said on Monday it was actively recruiting a CEO,
and a successor will be named as soon as possible.
(Reporting by Arathy S Nair in Bengaluru; Editing by Sriraj