CannTrust Sees Three Former Executives Charged With Fraud Among Other Items

It appears that Canadian regulators might be finally stepping up to the plate. It was announced this morning that several former officers and directors of CannTrust Holdings (OTC: CNTTQ) have been charged with Securities Act offences.

The charges notably relate to the drama that surrounds CannTrust and the growing of cannabis in illegal grow rooms, as well as certain financings that were conducted around the time of the events. Specifically, the release put out by the OSC indicates that the charges relate to “efforts to conceal the illegal growing of cannabis at CannTrust over a 10-month period,” as well as that the accused “did not disclose to investors that approximately 50 per cent of the total growing space at CannTrust’s facility in Pelham, Ontario was not licensed by Health Canada.”

After a joint investigation was conducted by the Ontario Securities Commission and the Royal Canadian Mounted Police Integrated Market Enforcement Team, three former directors of the company have been charged with a number of offences. Those charged include Peter Aceto, former chief executive officer of the company, Eric Paul, whom was the founder and former chairman of the company, and Mark Litwin, formerly the vice chairman of the company.

The charges for the accused consist of the following:

Mark Litwin:

• Fraud
• Insider trading
• Making a false prospectus and false preliminary prospectus
• Making false or misleading statements to the OSC and to the market
• Authorizing, permitting or acquiescing in the commission of an offence

Eric Paul:

• Fraud
• Insider trading
• Making false or misleading statements to the OSC and to the market
• Authorizing, permitting or acquiescing in the commission of an offence.

Peter Aceto:

• Fraud
• Making false or misleading statements to the OSC and to the market
• Making a false prospectus and false preliminary prospectus
• Authorizing, permitting or acquiescing in the commission of an offence

Insider trading charges filed against both Paul and Litwin relate to shares traded by the individuals while holding the material information related to the growing operations that was non-public. Litwin and Aceto meanwhile were charged with make a false prospectus and false preliminary prospectus in relation to the duo signing off on prospectuses used to raise capital in the US that stated the company was fully licensed and compliant with regulations.

The accused are set to appear in court on July 26, 2021 in relation to the charges.

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Information for this briefing was found via the Ontario Securities Commission. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.