Vaughan, Ont. – Some charges against three former CannTrust Holdings Inc. leaders accused of securities offenses have been dropped, the Ontario Securities Commission said Tuesday, although the fraud charges remain.
OSC spokesman JP Vexy said in an email that the withdrawn charges against Peter Aceto, Mark Litwin and Eric Paul were linked to making false or misleading statements to the Ontario Securities Commission via a CanTrust press release.
Ontario Securities Commission attorney Dihim Emami said in a virtual hearing held Tuesday, the charges would be dropped to help “focus on the issues” because of the expectation of a “complicated” prosecution and to reduce the length of the upcoming trial. taken.
“By doing this, we will save the trial time and distraction that would be necessary to debate the securities law issue related to those cases,” Emami told Judge Tim Lipson during a Zoom video conference.
Aceto, Paul and Litwin still face charges of fraud and authorizing, allowing or admitting to the commission of a crime.
Litwin and Paul are also facing charges of insider trading and Litwin and Aceto have been charged with making a false prospectus and a false preliminary prospectus.
The allegations were first made by the OSC in June 2021, nearly three years after CannTrust was found growing thousands of kilograms of cannabis in unlicensed rooms.
The OSC and the Royal Canadian Mounted Police allege that Litwin, Aceto and Paul did not disclose to investors about 50 percent of CannTrust’s growing location in Pelham, Ont. The facility was not licensed by Health Canada. They say the men used corporate disclosures to say they were in line with regulatory approval.
They also allege that Litwin and Aceto signed the prospectus used to raise funds in the US, stating that CannTrust was fully licensed and compliant with regulatory requirements, and that Litwin and Paul did not agree to the content. Traded CannTrust’s shares while in possession, growing undisclosed information about it growing unlicensed.
Aceto, who served as chief executive, was terminated for cause by CannTrust’s board in July 2019. Former chairman Paul resigned at the same time in response to a demand from the company’s board, and former vice president Litwin resigned in March 2021.
Litwin’s attorney Scott Fenton said in an email to The Canadian Press that he and his client are “delighted” by the withdrawal of some of the charges and expect the rest to “fight vigorously in the case.”
Lawyers for Aceto and Paul did not immediately respond to a request for comment.
Aceto’s lawyer previously said “evidence will show that he acted with integrity at all times.” Paul’s lawyer has said that “evidence will show (Paul) did nothing wrong.”
Their trial is scheduled to begin in October and is expected to last until mid-December.
In the wake of the allegations, CannTrust was delisted from the Toronto Stock Exchange and filed for creditor protection.
It has since been seeking a return and exit from creditor protection in March, after receiving $17 million in financing from a subsidiary of Kenzoll BV, a private equity investment company in the Netherlands.
In May, it changed its name to Fauna Holdings Inc. and said it would continue to review options for obtaining stock exchange listings for its common shares.
This report by The Canadian Press was first published on May 25, 2022.
Tara Deschamps, The Canadian Press