Shares of Pyrogenesis Canada, a manufacturer of plasma processes, experienced a significant downturn after a provincial regulator launched administrative proceedings against the CEO and chairman. This action is in relation to a settlement agreement made with a company controlled by the CEO's late father.
On Friday, Pyrogenesis Canada's stock dropped to a 52-week low, falling 9% to C$0.81 in Toronto. The shares reached a low of C$0.80 before recovering slightly. On the Nasdaq, the stock was down 9% at 61 cents.
The Autorite des marches financiers (AMF), Quebec's financial sector regulator, initiated the proceedings against CEO P. Peter Pascali, Chairman Alan Curleigh, and the company itself. These actions were taken due to transactions that occurred in 2018 with Phoenix Haute Technology. The AMF is seeking administrative penalties amounting to 550,000 Canadian dollars ($407,165) against the company. Furthermore, it is seeking orders to prohibit Pascali and Curleigh from acting as officers or directors for a period of five years.
Pyrogenesis Canada has stated that Pascali, Curleigh, and the company deny the allegations. They are prepared to defend themselves against the actions taken by the AMF. It is worth noting that based on previous AMF cases, these proceedings are expected to take several years to conclude.
The company has previously disclosed that the AMF investigated certain actions taken by Pascali relating to a settlement agreement made in April 2018. This settlement involved the issuance of Pyrogenesis company units to Phoenix as part of a resolution for an outstanding payment related to the acquisition of intellectual property rights completed in 2011.
Among the allegations made by the AMF are claims that Pascali breached the province's securities act and that both he and the company failed to comply with certain disclosure obligations. The regulator also alleges that Pascali and Curleigh did not fulfill their fiduciary duties as directors. In response to these allegations, the AMF is seeking administrative penalties totaling C$4.2 million against Pascali. Additionally, it is requesting a disgorgement order of C$9.57 million payable by Pascali to the AMF.
In light of these developments, Pyrogenesis Canada's future remains uncertain. Investors and industry observers will closely monitor the progress of the proceedings and the impact they may have on the company and its leadership.