CannTrust Shares Surge 17% on News of Front Office Shake-up
The news that many investors were expecting broke yesterday evening in what may be the climax of the ‘CannTrust Health Canada Fiasco’. As anticipated, CannTrust (TSX: TRST) (NYSE: CTST) officially terminated company CEO Peter Aceto and asked for the resignation of Chairman Eric Paul.
The nail in the coffin for the CannTrust executives came when the Globe and Mail published a story exposing Aceto and Paul as being complicit in the unlicensed cultivation scheme. The Globe exposé featured leaked emails and highlighted incriminating quotes directly from Aceto, Paul and CannTrust’s Director of Quality and Compliance Graham Lee.
At that point, the writing was on the wall and what took place yesterday evening was merely a formality. The CannTrust Special Committee led by Robert Marcovitch was formed in response to the Health Canada incident. Upon news of Aceto and Paul’s involvement in the unlicensed grow, the board had no choice but to remove the culpable individuals.
The following excerpts are from CannTrust’s formal press release dated July 25, 2019:
“The investigation into the Company’s non-compliance with Health Canada regulations and ancillary matters uncovered new information that has resulted in a determination by the Board to terminate with cause CannTrust CEO Peter Aceto.”
“In addition, the Board of Directors demanded the resignation of the Company’s Chair Eric Paul and he complied.”
“Based on new information uncovered by the investigation, the Company made a voluntary disclosure to Health Canada. The Company will fully cooperate with the regulator in an open and transparent manner to resolve these matters fully and expeditiously.”
Special Committee Chair Robert Marcovitch has stepped down as a member of the Special Committee and effective immediately will fill the role of interim CEO. Marcovitch has wealth of executive experience and most recently served as the CEO of the international winter sports equipment company K2 Sports. Before that Marcovitch was the CEO of The Coleman Outdoor Company.
Mr. Marcovitch gave the following official statement:
“Our first priority is to complete the remaining items of our investigation and bring the Company’s operations into full regulatory compliance. Implementing the necessary changes is essential to the interests of our medical patients, customers, shareholders and employees. CannTrust has a number of strengths it can draw upon to reset and rebuild, including industry-leading research, innovation and intellectual property.”
Filling the void left by Marcovitch in the Special Committee is Mark Dawber. Dawber will assume the role of Special Committee Chair.
The new CannTrust management is planning to make more operational changes in the near future so stay tuned for further updates.
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