After five years of investigation into the Montreal company PyroGenèse and its managers, the Autorité des marchés financiers (AMF) is claiming a record sum of 14 million from the big boss of this company, Peter Pascali, in connection with financial transactions that occurred in 2018.
This would be the largest sum ever claimed from an individual by the Quebec stock market policeman.
An amount of $550,000 is also claimed from PyroGenèse.
An administrative proceeding has just been filed with the Financial Markets Court and the AMF will eventually present its evidence before this body.
The AMF is also seeking orders prohibiting Peter Pascal and Alan Curleigh, who is a member of PyroGenèse’s board of directors, from acting as an officer or director of a reporting issuer for a period of five years.
The management of PyroGenèse revealed last February that its CEO was under investigation.
PyroGenesis issued units consisting of common stock and common stock warrants to Phoenix with a total value of $3.7 million.
The issuance of these units was to settle a $5.5 million claim by Phoenix relating to the unpaid portion of the consideration payable by PyroGenesis to Phoenix for the acquisition of intellectual property rights in 2011.
In connection with transactions related to this case, the AMF alleges that Peter Pascali violated laws within its jurisdiction.
The AMF also alleges that Peter Pascali and PyroGenèse disclosed false information, that Peter Pascali and PyroGenèse failed to comply with their continuous disclosure obligations under applicable securities laws, and that Peter Pascali and Alan Curleigh breached their fiduciary duties as directors.
Peter Pascali, Alan Curleigh, and PyroGenesis deny the allegations made against them and consider them baseless. They intend to defend themselves “with determination”.
“It is disappointing that after several years of extensive investigation by the AMF and cooperation from PyroGenèse, the AMF has determined that these procedures are justified,” Peter Pascali said late Thursday by communicated.
In its press release, PyroGenesis stresses that considering the precedents, the proceedings will likely take “years” to conclude.
“In the meantime, investors can take comfort in the fact that after several years of investigation in which events over a 12-year period have been thoroughly examined, the allegations relate only to transactions related to Phoenix in 2018,” says PyroGenèse.
The company also points out that investors should be reassured by the fact that the administrative penalties that the AMF wants to impose on PyroGenèse are limited to $550,000, with the vast majority of financial penalties and costs aimed at Peter Pascali.
The management of PyroGenèse also says it considers that these procedures will be less distracting than the investigation process that has taken place in recent years.
Peter Pascali is PyroGenesis’ largest shareholder, with an approximate 45% stake.
PyroGenesis stock went from being worth less than $1 in 2020 to over $12 on the Toronto Stock Exchange in 2021 before returning to below $1.
The current share price gives the company a market value of 160 million.
