TORONTO – Following a joint investigation by the OSC and Royal Canadian Mounted Police (RCMP), Integrated Market Enforcement Team (IMET), three former directors and officers at CannTrust Holdings Inc. (CannTrust) have been charged with offences under the Securities Act (Ontario).

Charges include:  

Mark Litwin from Toronto, Ontario:

• 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 from Toronto, Ontario:

• 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 from Toronto, Ontario:

• 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

These allegations relate to efforts to conceal the illegal growing of cannabis at CannTrust over a 10-month period in 2018 and 2019. During this time, the three 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. In press releases, corporate disclosures, analyst calls and prospectuses, they asserted that CannTrust was compliant with regulatory requirements, and they included all cannabis production in the company’s financial statements, without stating that half was grown without a license. Additionally, Litwin and Aceto signed off on prospectuses used to raise capital in the United States, which stated that CannTrust was fully licensed and compliant with regulatory requirements. Litwin and Paul also traded shares of CannTrust while in possession of the material, undisclosed information regarding the unlicensed growing.

“This matter demonstrates how the OSC’s quasi-criminal team, working closely with policing partners, is evolving to focus on more complex cases involving senior level market participants, in addition to fraudsters and repeat offenders,” said Jeff Kehoe, Director of Enforcement at the OSC. “In cases involving serious market misconduct, prosecution in provincial court allows us to seek a range of strong sanctions, including jail time.”

“This is a good example of the RCMP IMET working with regulatory partners to investigate serious capital market offences that are of regional or national significance and that threaten investor confidence or economic stability in Canada,” stated Inspector Vance Morgan, Officer in Charge of the RCMP Toronto IMET Section.

All accused are scheduled to appear in court on this matter on July 26, 2021, at 11 AM in Courtroom #112, at the Ontario Court of Justice, Old City Hall Courthouse at 60 Queen Street West, Toronto, Ontario.

This investigation was conducted by the RCMP and OSC Enforcement Staff who investigate quasi-criminal and criminal offences related to securities, including the investigation of alleged recidivists. The primary objective is to protect investors and further enhance confidence in the Canadian capital markets through effective enforcement. 

Charges laid under the Securities Act (quasi-criminal charges) are prosecuted by the OSC. Charges laid under the Criminal Code are prosecuted by the Ministry of the Attorney General.

To date, OSC Enforcement has pursued 50 quasi-criminal and criminal matters involving 73 accused.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at http://www.osc.ca.

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