The prosecution of three businessmen caught up in one of Canada’s most spectacular cannabis-industry flameouts suffered its own collapse on Wednesday, as lawyers for the Ontario Securities Commission (OSC) moved to withdraw all charges mid-trial.
But even defeat didn’t come easy for the prosecution: Defence lawyers for former CannTrust Holdings officials Peter Aceto, Eric Paul and Mark Litwin refused to merely have the charges dropped and held out for full acquittals for their clients.
“After careful review of the evidence during the trial, we are of the view that as charged, there is no reasonable prospect of conviction,” OSC lawyer Dihim Emami told the court. He asked for more time to consider the defendants’ request for acquittals, however, saying it had only been presented to him minutes earlier.
Scott Fenton, a lawyer for CannTrust’s former vice-chair Litwin, appealed to the judge to end the matter “today.”
“I’m respectfully against drawing this out.… It’s time to end it for all the gentlemen.”
The sudden turnaround in the case is just the latest twist in a saga that saw one of Canada’s most valuable publicly traded cannabis companies shattered by allegations that it grew thousands of kilograms of illegal weed and then lied to investors about it. Hundreds of jobs and nearly a billion dollars in shareholder value were wiped out, while the company and its executives, directors, underwriters and auditors were hit with a raft of class-action lawsuits on both sides of the Canada-U.S. border.
Charges based on alleged illegal growing
The RCMP and OSC charged Paul, Litwin and Aceto — who previously headed up Scotiabank’s online-banking subsidiary Tangerine — with quasi-criminal securities offences last year.
The charges came after CannTrust announced in July 2019 that Health Canada had learned of “the growing of cannabis in five unlicensed rooms” at the company’s Pelham, Ont., greenhouse between October 2018 and March 2019, before the rooms received the proper approvals in April 2019.
The OSC claimed the men did not disclose to investors that nearly half the growing space at the facility wasn’t properly licensed, and that they used corporate disclosures to assert that “CannTrust was compliant with regulatory requirements.”
Prosecutors were also alleging Litwin and Aceto signed off on pitches to U.S. investors that stated CannTrust was fully licensed and compliant, and that Litwin and Paul traded shares of CannTrust while knowing about the allegations of unlicensed growing but before it was publicly disclosed.
Trial testimony last week and submissions by defence lawyers, however, painted a different picture: that the company’s entire greenhouse was licensed all along, and it just needed some routine approvals from Health Canada to start growing pot plants in the additional rooms.
Under cross-examination, CannTrust’s former director of quality and compliance Graham Lee agreed with Fenton that the company’s cannabis production licence from Health Canada didn’t actually restrict what rooms it could grow in.
That undercut the prosecution’s case, which hinged on the idea the company had been engaged in unlicensed cannabis cultivation.
At one point, Lee testified, CannTrust staff did stage photographs as part of a submission to Health Canada, in an attempt to disguise the extra growing rooms. But senior management did not instruct him to do this, he said.
The consequences of CannTrust’s regulatory struggles have been vast: Days after it made its July 2019 announcement about the purportedly “unlicensed rooms,” the company voluntarily suspended sales of all its cannabis products. Then in September 2019, Health Canada officially suspended the company’s licence to sell. The next month, the company said it would destroy $77 million worth of plants and inventory.
As its revenue streams ran dry, CannTrust was forced into bankruptcy protection in March 2020. Once worth $1.5 billion on stock markets, the business was quickly delisted in New York and Toronto.
The company, some of its former executives and a number of its underwriters settled the cross-border class-action lawsuit for $83 million last year, without any admissions of wrongdoing. Most of the company’s remaining assets were bought earlier this year by a group of investors led by a Dutch-based private equity firm. CannTrust then changed its name to Phoena Holdings Inc.
Defence lawyers did not want to comment Wednesday. Before the trial began, Aceto’s lawyer Frank Addario told The Canadian Press that his client “behaved legally and with integrity during his time at CannTrust.”
The OSC, Ontario’s stock-market regulator, said it wouldn’t comment while the matter is still before the court.
CBC News also reached out to Health Canada with questions. The agency said it would look into it.
The case is back in Toronto’s Old City Hall court on Thursday for a determination of whether all three men will be formally acquitted.
India’s Adani firms lose $65bn in value – Al Jazeera English
Most Adani Group shares fell sharply on Monday as the Indian conglomerate’s rebuttal of a US short seller’s criticism failed to pacify investors, deepening a market rout that has now led to losses of $65bn in the group’s stock values.
Led by Asia’s richest man Gautam Adani, the Indian group has locked horns with Hindenburg Research and on Sunday hit back at the short seller’s report of last week that flagged concerns about its debt levels and the use of tax havens.
Adani said it complied with all local laws and had made the necessary regulatory disclosures.
Adani Transmission, Adani Total Gas, Adani Green Energy, Adani Power and Adani Wilmar fell between 5 percent and 20 percent on Monday.
Flagship Adani Enterprises, which is facing a crucial test this week with a follow-on share offering, swung between gains and losses before settling 4.8 percent higher. It stayed well below the offer price of the issue, which if successful will be the largest such share offering ever in India.
Adani Enterprises’ $2.5bn secondary share sale closed its second day amid weak investor sentiment. The stock closed at 2,892.85 rupees ($35.47), 7 percent below the 3,112 rupees ($38.17) lower end of the offer price band. The upper band is 3,276 rupees ($40.17).
Data from stock exchanges on Monday showed Adani has now received bids for 1.4 million shares, or just over 3 percent, of the 45.5 million shares on offer. The deal closes on Tuesday.
Foreign and domestic institutional investors, as well as mutual funds, have made no bids so far, according to the data.
“Retail participation is likely to have a shortfall with current market prices still trailing the offer price and sentiment taking a hit due to the Hindenburg controversy,” said Hemang Jani, equity strategist at Motilal Oswal Financial Services.
“While there is a risk that the share sale does not go through, it will be crucial today to wait and see how institutional investors participate.”
Abu Dhabi conglomerate International Holding Company said on Monday that it would invest 1.4 billion dirhams ($381.17m) in the offering.
Share sale on schedule
The Adani Group told Reuters in a statement on Saturday that the sale remained on schedule at the planned issue price, even as sources said bankers of the country’s largest secondary share sale were considering extending the timeline beyond January 31, or tweaking the price due to the fall in its share price.
India’s rules stipulate that the share offering must receive a minimum subscription of 90 percent, and if it does not, the issuer must refund the entire amount. Maybank Securities and Abu Dhabi Investment Authority are among investors who bid for the anchor portion of the issue.
Maybank said in a statement that “there is no financial impact” on it as the subscription to Adani’s offer was fully funded by client funds.
India’s state-run insurance behemoth Life Insurance Corporation (LIC) told Reuters on Monday that it was reviewing the Adani Group’s response to Hindenburg’s report and would hold talks with the management within days.
LIC took 5 percent of the $734m anchor portion. It already holds a 4.23 percent stake in the flagship Adani firm, while its other exposures include a 9.14 percent stake in Adani Ports and 5.96 percent in Adani Total Gas.
“Since we are a large investor we have the right to ask relevant questions,” LIC Managing Director Raj Kumar said.
US dollar-denominated bonds issued by Adani Ports and Special Economic Zone continued their fall into a second week, with the bond maturing in August 2027 down 5 cents to 73.03 cents, the lowest since June 2020. Other dollar-denominated bonds of the group were also trading lower.
Index provider MSCI has said it was seeking feedback from market participants on Adani and was monitoring the factors that “may impact the eligibility of those relevant securities” in MSCI indexes.
In its response on Sunday, Adani highlighted its relationships with local and international banks and its access to diverse funding sources and structures, listing US banks Citigroup and JPMorgan Chase & Co, as well as other lenders including BNP Paribas, Credit Suisse, Deutsche Bank, Barclays and Standard Chartered.
The stock market meltdown is a dramatic setback for 60-year-old Adani. The school dropout’s stunning rise came with over 1,500 percent gains in some of his group stocks over three years, making him the world’s third-richest man before he slipped to rank eighth on the Forbes list on Monday.
Responding to Adani’s rebuttal, Hindenburg said the company’s “response largely confirmed our findings and ignored our key questions”.
Hindenburg in its report said Adani companies had “substantial debt” and that shares in seven Adani-listed companies have an 85 percent downside due to what it called “sky-high valuations”.
Adani’s response stated that over the past decade, its group companies have “consistently de-levered”.
Ford to cut prices of Mustang Mach-E, following Tesla's lead – Reuters
Jan 30 (Reuters) – Ford Motor Co (F.N) on Monday cut prices of its electric crossover SUV Mustang Mach-E by as much as $5,900 per vehicle, weeks after rival Tesla Inc (TSLA.O) slashed prices globally on its electric vehicles by as much as 20%.
Shares of Ford closed down 2.9% in above average trading to $12.89. Tesla fell 6.3%.
The move comes as electric vehicle manufacturers are feeling pressure from Tesla’s price cut to respond.
“Ford just cut Mustang EV prices in response to Tesla’s price cut. Mini price war about to begin with EVs in the US with Tesla’s shot across the bow on price cuts,” said Dan Ives, an analyst at Wedbush Securities, on Twitter.
The move will make at least one additional version of the Mach-E again eligible for a $7,500 federal tax credit, which requires the Ford EV to have a suggested retail price of no more than $55,000 to be eligible.
Ford had already planned to increase Mach-E production this year at its plant in Mexico to 130,000 vehicles from 78,000 in 2022, and said in November it was accelerating Mustang Mach-E production and targeting global annual production rate of 270,000 by the end of 2023 including its China production.
Ford builds the Mach-E in Mexico and China.
“Tesla’s price cut was a major blow to the prospects of competing EV models and the Mustang Mach-E directly competes with Tesla’s Model Y,” said Garrett Nelson, an analyst at CFRA Research.
Ford is cutting prices by up to 8% on various versions of the Mach-E, as well as cutting the price of the extended range battery by about 19%. The lowest-price models are getting smaller $600 to $900 price cuts. The Ford price cuts only impact North American prices.
Ford Chief Executive Jim Farley said on Twitter, “scaling will shorten customer wait times. And with higher production, we’re reducing costs, which allows us to share these savings with customers.”
Ford sold 39,458 Mach-Es in the United States last year, up from 27,140 in 2021.
General Motors (GM.N) said Monday it had no plans to adjust prices in response to others. The Detroit automaker in June cut prices on the Bolt by around $6,000 and by as much as 18% for the lowest-price version and earlier this month the vehicle became eligible for the $7,500 federal tax credit.
Ford said existing Mustang Mach-E customers awaiting delivery of vehicles will automatically receive the price cut.
Our Standards: The Thomson Reuters Trust Principles.
Nike sues Lululemon for infringement of footwear patents – CBC.ca
Nike Inc. sued Lululemon Athletica Inc. on Monday, saying that at least four of the Canadian athletic apparel company’s footwear products infringe its patents.
In a complaint filed in the U.S. federal court in Manhattan, New York, Nike said it has suffered economic harm and irreparable injury from Lululemon’s sale of its Blissfeel, Chargefeel Low, Chargefeel Mid and Strongfeel footwear.
Nike, based in Beaverton, Ore., said the three patents at issue concern textile and other elements, including one addressing how the footwear will perform when force is applied.
Nike is seeking unspecified damages.
Lululemon, based in Vancouver, did not immediately respond to requests for comment.
This wasn’t the first time Nike has sued Lululemon for patent infringement — on Jan. 5, 2022, it accused the athleisure brand of making and selling the Mirror Home Gym and related mobile apps without authorization.
Nike accused its smaller rival of infringing six patents, including technology that enables users to target specific levels of exertion, compete with other users and record their own performance.
Nike has sought triple damages for Lululemon’s alleged willful infringement and a variety of other remedies regarding the Mirror Home Gym and related mobile apps.
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