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Sep 08, 2020
CALGARY – The Alberta Securities Commission (ASC) has concluded a Settlement Agreement and Undertaking with Gordon John Rekydal. As part of the settlement agreement, Reykdal admitted to contravening Alberta securities laws by authorizing misrepresentations in The Cash Store Financial Services Inc. (Cash Store) financial statements. Reykdal also admitted to providing misleading certificates to the ASC about Cash Store’s disclosure.
“Public companies and their senior executives have a responsibility to provide accurate, timely and complete disclosure – this is a cornerstone of a fair and efficient capital market,” said Cynthia Campbell, Director, Enforcement. “The ASC will hold accountable anyone who misleads investors including executives who have a duty to ensure truthful information is provided to them.”
Reykdal was the chair and chief executive officer of Cash Store, an Alberta-based company that operated in the payday loan industry. The company’s shares traded on the Toronto and New York Stock Exchanges until the spring of 2014, when Cash Store applied for creditor protection.
In certain annual and interim financial statements, Cash Store presented itself as a broker of short-term loans and described agreements with its lenders in its financial statements. Cash Store’s disclosure stated that, under the written agreements with lenders, the responsibility for losses suffered on uncollectible loans rested with the lenders. Cash Store’s balance sheet did not include the short-term loans funded by the lenders because the loans were repayable to the lenders and represented assets of the lenders. However, in reality, and as admitted to in the settlement agreement, Cash Store operated its business differently than described in its disclosure. Cash Store did not comply with the agreements with the lenders and had assumed responsibility for losses suffered on uncollectible loans.
As a result, Cash Store misrepresented its operations and failed to provide complete and accurate disclosure in respect of the degree of material financial risk in its operations. Loan losses occurred and, contrary to its financial disclosure, were borne by Cash Store. Also, by not complying with the agreements with the lenders, Cash Store created further risk to its operations.
As part of the settlement agreement, Reykdal paid $300,000 to the ASC plus $200,000 for costs. He also agreed to resign all positions he may have as an officer or director of any reporting issuer and to be prohibited from becoming an officer or director of any reporting issuer for a period of two years. Reykdal further agreed to pursue and complete training in best practices for public company governance and disclosure within two years of the date of the settlement agreement, failing which his director and officer prohibitions will continue until he completes that training.
The ASC gratefully acknowledges the assistance of the Ontario Securities Commission in this matter.
A copy of the settlement agreement can be found on the ASC website at albertasecurities.com.
The ASC is the regulatory agency responsible for administering the province's securities laws. It is entrusted with fostering a fair and efficient capital market in Alberta and with protecting investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.
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