As the CannTrust Holdings (NYSE:CTST,TSX:TRST) scandal continues, new revelations about the activity of company executives have come to light.
A new report indicates that CannTrust executives secured millions in gains from insider selling last November after the circulation of an internal email about the company’s improper growing.
The Canadian company has weathered turmoil since Health Canada discovered earlier this month that it had been growing cannabis in unlicensed rooms at its facility in Pelham, Ontario.
Since the original announcement by the firm on July 8, shares of CannTrust have seen a nosedive in value of over 50 percent both in New York and Toronto.
The company is now awaiting a decision from Health Canada, the regulatory body tasked with overseeing the marijuana industry, on the status of its licensed operations.
The latest news shows that according to selling and buying activity records, two executives at the firm, former board chair Eric Paul, who also previously served as CEO of the company, and Mark Litwin, a director, sold about C$1 million worth of shares on November 16 of last year.
That is the same day an internal email showed Paul was aware of the irregular growing, according to a Globe and Mail report.
Paul was asked to resign on July 25, at the same time Peter Aceto, former CEO of the company, was fired.
The Globe and Mail report also points to the selling of C$5 million worth of CannTrust shares by Cannamed Financial, a holding company, after the email went out.
On Monday (July 29), Bloomberg reported that Aceto has been stripped of approximately C$8.2 million worth of stock options in the company.
The report indicates that his options will most likely be canceled; however, in the case that they are not, the performance of the stock isn’t helping Aceto’s cause. The news outlet states:
According to the options awarded to Aceto when he joined the company in October, a third were to be vested annually in one-third increments, with two-thirds to be vested based on achieving share price milestones of $15 to $25 over three years.
As mentioned, the market is now preparing for a ruling from Health Canada on the status of CannTrust’s operations. The company has filed a review package with the federal agency.
As of 3:41 p.m. EDT on Tuesday (July 30), shares of the company were trading down 0.92 and 0.35 percent at US$2.15 and C$2.85 in New York and Toronto, respectively.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
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