Cronos Group, Inc, CRON announced that it has entered into definitive settlement agreements with each U.S. Securities and Exchange Commission and employees of the Ontario Securities Commission (the “OSC”) to complete investigations into Cronos’ previously released restatements of its financial reports for the first three quarters of 2019 and the second quarter of 2021 .
“We are pleased to have resolved these matters,” said Mike Gorenstein, Cronos chairman, president and CEO. “Significant steps have been taken to strengthen our internal controls and we are committed to continuing this work.”
What happened
On Monday, October 24, the SEC indicted Toronto-based Cronos Group for misrepresenting millions of dollars in revenue and other accounting misconduct over multiple reporting periods.
The SEC also accused Cronos’ former chief commercial officer of William Hilson, involving fraud and aiding and abetting the Company’s violations. In a settlement agreement with Cronos, the commission found that the company should not be fined because of its timely self-disclosure, significant cooperation and remedial actions.
The SEC order also revealed that in one of the quarters between 2019 and 2021 Hilson entered into an undisclosed oral agreement sell cannabis commodities and buy back cannabis products in the following quarter. The agreement was not known or accounted for by Cronos, which discovered the $2.3 million accounting error during an internal investigation.
Cronos reported the misconduct to the SEC once found and then collaborated on the commission’s investigation. It has also taken effective remedial actions to improve its internal accounting controls.
“It is crucial for issuers to have adequate controls in place before adopting the reporting requirements required by public companies,” he said Markus cave, the deputy director of the SEC’s Enforcement Division. “During today’s order…
