TORONTO, Oct. 24, 2022 (GLOBE NEWSWIRE) -- Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (“Cronos” or the “Company”) today announced that it has reached final settlement agreements with each of the U.S. Securities and Exchange Commission (the “SEC”) and the Staff of the Ontario Securities Commission (the “OSC”) that resolve those regulators’ investigations regarding the previously disclosed restatements by the Company of its financial statements for the first three quarters of 2019 and the second quarter of 2021.
“We are pleased to have resolved these matters,” said Mike Gorenstein, Chairman, President and Chief Executive Officer of Cronos. “Important steps have been taken to strengthen our internal controls, and we are committed to continuing this work.”
On October 24, 2022, the SEC issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8(a) of the U.S. Securities Act of 1933 (the “Securities Act”) and Section 21(c) of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”), Making Findings, and Imposing a Cease-and-Desist Order (the “SEC Settlement Order”) resolving the SEC’s investigation of the restatements by the Company described above.
The Company has agreed to settle with the SEC, without admitting or denying the allegations described in the SEC Settlement Order. The SEC Settlement Order fully and finally disposes of the investigation of the Company by the SEC into the restatements without the payment of any civil penalty or other amount.
The SEC Settlement Order requires the Company to cease and desist from committing or causing any violations and any future violations of certain provisions of the U.S. federal securities laws. Additionally, the Company agreed to certain undertakings which include, among other things, retaining a qualified independent consultant (the “Consultant”) to engage in a review of, and make recommendations with respect to, certain of the Company’s internal accounting controls and internal control over financing reporting.
On October 24, 2022, the Ontario Capital Markets Tribunal approved a settlement agreement (the “OSC Settlement Agreement”) between the Company and the staff of the OSC, resolving the OSC’s investigation of the restatements by the Company described above.
Pursuant to the terms of the OSC Settlement Agreement, which fully and finally disposes of the investigation of the Company by the OSC, Cronos agreed to pay a total of C$1.34 million to fully settle the matter and acknowledged that it had not complied with certain requirements under the Securities Act (Ontario) in connection with the filing of interim financial reports in the manner set out therein. Additionally, the Company agreed to retain the Consultant on substantially the same terms as were required by the SEC pursuant to the SEC Settlement Order.
As a result of the SEC Settlement, the Company will be unable to rely on the private offering exemptions provided by Regulations A and D under the Securities Act for a period of five years; lose its status as a well-known seasoned issuer for a period of three years; and be unable to rely on the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 for a period of three years.
For more information regarding the SEC Settlement Order and the OSC Settlement Agreement, please see the Company’s Form 8-K filed on EDGAR at www.sec.gov/edgar and on the Company’s SEDAR profile at www.sedar.com.
Cronos is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development. With a passion to responsibly elevate the consumer experience, Cronos is building an iconic brand portfolio. Cronos’ diverse international brand portfolio includes Spinach®, PEACE NATURALS®, Lord Jones®, Happy Dance® and PEACE+®. For more information about Cronos and its brands, please visit: thecronosgroup.com.
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