Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

A for sale sign is seen in this file photo.

Ryan McVay/Getty Images

Shares of Home Capital Group Inc. tumbled nearly 10 per cent Tuesday, as investors gave their verdict on the company's decision to sack chief executive officer Martin Reid after less than a year in the job.

Mr. Reid was terminated Monday, making way for director Bonita Then to take over as interim president and CEO.

Home Capital did not give a specific reason for the change, saying only that it "requires leadership that can bring to bear a renewed operational discipline, emphasis on risk management and controls, and focus on improving performance."

Story continues below advertisement

Analysts say that the timing and uncertainty surrounding Mr. Reid's exit doesn't bode well for the stock. His departure comes amid a push at the company to slash expenses and grow assets in a Canadian real estate market that is both frothy and adjusting to new federal mortgage rules.

It also comes two weeks after Home Capital said that several current and former officers and directors have received enforcement notices from the Ontario Securities Commission related to the company's past disclosure practices and, in some cases, trades in its shares. An OSC enforcement notice can be a precursor to disciplinary action by the regulator.

Mr. Reid took over the reins at Home Capital in May of last year, when long-time executive Gerald Soloway retired after nearly 30 years in charge. Mr. Reid joined Home Trust Co., the regulated lending subsidiary of Home Capital, as treasurer in 2007.

In 2010, he was promoted to the role of president of Home Capital and Home Trust.

Marc Charbin, an analyst at Laurentian Bank Securities, wondered whether the board was holding Mr. Reid "solely accountable" for the company's poor results in recent years.

The company's performance has been hampered by broker terminations, declining loan originations and missed financial guidance.

"Investors are unlikely to get a straight answer on this matter," Mr. Charbin said. Home Capital shares are down 28 per cent in the past year and have lost more than half their value since mid-2014.

Story continues below advertisement

Geoffrey Kwan, an analyst at RBC Dominion Securities Inc., questioned the company's "unexpected" decision to dismiss Mr. Reid without naming a permanent successor.

He also said it was "interesting" that neither Mr. Soloway nor former chief financial officer Robert Blowes were named interim CEO. Both former executives are still directors of the company.

Home Capital disclosed last month that it had received an enforcement notice from staff at the OSC related to its disclosure in 2014 and 2015 about an investigation into falsified mortgage documents, which prompted the company to suspend 45 mortgage brokers in its network. On March 14, Home Capital added that the OSC has also issued enforcement notices to "several current and former officers and directors of the company" related to that disclosure and trades in the company's shares.

Earlier this year, a proposed class action lawsuit was initiated in Ontario against the company and three of its officers or former officers – Mr. Soloway, Mr. Blowes and current CFO Robert Morton. The lawsuit, which alleges that misrepresentations were made in public filings, seeks $200-million in damages.

The company has maintained that it believes its disclosures satisfied applicable disclosure requirements.

"While a management restructuring of an underperforming company can often be a positive, the large amount of uncertainties surrounding HCG point to continued risks in the near term," Dylan Steuart, an analyst at Industrial Alliance Securities Inc., said in a research note.

Story continues below advertisement

"The uncertainty surrounding earnings development (particularly while a CEO search is underway), and potential overhangs regarding recent OSC investigation into company disclosures lead to a continued cautious view."

Ms. Then has a background in consumer products and food and was formerly an executive at Specialty Foods Ltd. and Humpty Dumpty Snack Foods Inc.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies