Environmental Management Solutions Inc. has revealed that the Ontario Securities Commission has again turned its attention toward the company, investigating a spike in trading in mid-December just before EMS announced a new recapitalization deal.
EMS said the OSC indicated its review was triggered by a news release issued Dec. 19 that revealed the company had settled all outstanding litigation with former CEO Frank D'Addario, and had struck a $20-million financing deal with ONCAP II LP, an affiliate of Onex Corp.
EMS said the OSC asked for a detailed chronology of events leading up to the announcement, including a list of all people who were aware of the recapitalization and the settlement agreement.
EMS officials would not comment on the matter yesterday, but the news release said the company is co-operating fully with the OSC's requests.
EMS shares had a sharp spike in mid-December prior to the announcement. The shares climbed a total of 33 per cent in trading on Dec. 12 and Dec. 13, closing at 53 cents, up from 40 cents before the spike.
At the request of Market Regulation Services, EMS issued a statement on the afternoon of Dec. 13 saying there was no material change in the company's situation that would account for the market activity.
The latest investigation comes on the heels of a traumatic year for EMS, a Burlington, Ont.-based waste management company.
Mr. D'Addario, who founded EMS in 1995, was fired as vice-chairman in January amid allegations of misappropriating company money and improper transactions with related parties.
In April, he fielded a dissident slate of directors in an attempt to overturn the EMS board that had ousted him.
The board is led by former Ontario premier Mike Harris. Shareholders narrowly defeated his slate, however, and the Ontario Superior Court later rejected Mr. D'Addario's attempt to have the voting results overturned.
On Dec. 9, Mr. D'Addario issued a press release saying he had been informed by the OSC that it had completed its investigation into allegations of stock manipulation and disclosure issues, and had closed its file on the matter.
The OSC issued a statement saying Mr. D'Addario had received a letter cautioning him about his conduct.
© The Globe and Mail
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