Electrovaya president faces $250K penalty for disclosure failures

The Ontario Securities Commission approved a settlement agreement with Electrovaya Inc. and its president and chief executive officer, Sankar Das Gupta, for the company’s failure to comply with disclosure obligations and update forward-looking information.

The settlement agreement follows allegations by OSC staff that Electrovaya issued unbalanced press releases and failed to update its disclosure record, and that Das Gupta authorized, permitted or acquiesced to the conduct.

In 2016, Electrovaya issued five press releases announcing significant new business relationships. None of the press releases contained balanced disclosure discussing the nature of the arrangements (often non-binding) or the related risks, contingencies or barriers to realization.

Electrovaya also failed to update its disclosure record related to two other customer arrangements after it was clear that its previously disclosed revenue estimates wouldn’t be met, the OSC says.

“We expect public companies and their directors and officers to provide factual and balanced information to investors, and to disclose any events or circumstances that are likely to cause actual results to materially differ from previously disclosed, forward-looking information,” says Huston Loke, director of corporate finance at the OSC, in a release.

In connection with the settlement, a consultant will review Electrovaya’s corporate governance framework and its disclosure controls and procedures. Das Gupta must pay for the review, estimated to cost between $85,000 and $100,000, according to the settlement. He must also pay a penalty of $250,000 and is prohibited from becoming or acting as a director or officer of a reporting issuer (other than Electrovaya or an affiliate) for one year.

Read the full settlement agreement.

Staff

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