Cronos Group, former exec agree to pay fines as part of settlement with OSC

TORONTO — The Capital Markets Tribunal has approved a pair of settlements between the Ontario Securities Commission and a Toronto cannabis company and one of its former executives that allegedly failed to file accurate financial statements.

As part of the settlements, the tribunal says Cronos Group Inc. will pay an administrative penalty of $1.3 million and costs totalling $40,000 and submit to a review analyzing its compliance around financial reporting.

Former chief financial and chief commercial officer William Hilson will make a voluntary payment of $50,000 to the OSC, pay costs of $20,000 and agree not to serve as a director or officer of any reporting issuer for one year.

The settlements stem from OSC allegations that Cronos improperly recognized $7.6 million in revenue in several 2019 financial statements.

The regulator also claimed Cronos overstated “virtually all” of its U.S. goodwill and a “significant” portion of its U.S. intangible assets by roughly US$234.9 million in its second-quarter 2021 interim financial statements.

The OSC says some of the revenue errors were caused by transactions that “lacked commercial substance” and placed part of the blame on Hilson.

Cronos corrected the errors, but the OSC says they constitute a breach of Ontario’s securities law and are contrary to public interest.

This report by The Canadian Press was first published Oct. 24, 2022.

The Canadian Press