Hey Citadel, wut doing ? July 2020: 'Citadel Investment Group 'one of the largest hedge fund holders of the company'.
Hey Citadel, wut doing ? July 2020: 'Citadel Investment Group 'one of the largest hedge fund holders of the company'. Today: between 2019 and 2021, 'Cronos submitted financial statements with the SEC that contained material accounting errors related to revenue recognition goodwill impairment'
Source 1: https://www.sec.gov/news/press-release/2022-191
The Securities and Exchange Commission today charged Cronos Group Inc., a Nasdaq-listed cannabis company based in Toronto, for improperly accounting for millions of dollars of revenue and for other accounting misconduct in multiple reporting periods. The SEC also charged Cronos’s former Chief Commercial Officer, William Hilson, with fraud and aiding and abetting the company’s violations. In agreeing to settle with Cronos, the Commission determined that the company should not incur a financial penalty, given its timely self-reporting, significant cooperation, and remediation.
According to the SEC’s order, in three separate quarters between 2019 and 2021, Cronos submitted financial statements with the SEC that contained material accounting errors related to, among other things, revenue recognition and goodwill impairment. The order also found that, in one of the quarters, Hilson entered into an undisclosed oral agreement to sell cannabis raw material and to repurchase cannabis product in the following quarter. This agreement was neither known nor accounted for by Cronos, which discovered the $2.3 million accounting error during an internal investigation. After discovering the accounting errors, Cronos promptly reported the misconduct to the SEC and provided extensive cooperation that meaningfully advanced the Commission’s investigation. It also took effective remedial steps to enhance its internal accounting controls.
"It is critically important for issuers to have adequate controls in place before they take on the reporting obligations required of public companies," said Mark Cave, Associate Director in the SEC’s Enforcement Division. "While today’s order finds that Cronos’s controls were not up to standards when it began filing financial statements with the SEC, Cronos avoided penalties by promptly self-reporting its accounting misconduct as it came to light within the company, cooperating with our investigation, and promptly taking effective remedial steps."
The SEC’s order against Cronos finds that the company violated the antifraud, reporting, books and records, and internal controls provisions of the federal securities laws. The SEC’s order against Hilson finds that he violated the antifraud provisions of the federal securities laws and further aided and abetted and caused Cronos’s violations of the reporting, books and records, and internal controls provisions.
Without admitting or denying the SEC’s findings, Cronos and Hilson offered to settle the matter by agreeing to cease and desist from future violations of the charged provisions. In addition, Cronos agreed to retain an independent compliance consultant to review, assess, and make recommendations with respect to the firm’s financial reporting and accounting controls. Hilson agreed to a three-year officer and director bar and agreed to be suspended from appearing and practicing before the SEC as an accountant for at least three years. The Commission determined not to impose a financial penalty on Hilson in light of his consent to pay $70,000 (CAD), or approximately $54,000 (USD), to the Ontario Securities Commission for similar conduct.
The SEC’s investigation was conducted by Kendra Kinnaird and John Higgins, with the assistance of Marlee Miller and Bonnie Kartzman in the Office of International Affairs. The investigation was supervised by Fuad Rana and Kristen Dieter. The SEC appreciates the assistance of the Ontario Securities Commission.
Source 2: https://finance.yahoo.com/news/cronos-group-inc-cron-hedge-201515075.html
July 8, 2020
Among these funds, Chescapmanager LLC held the most valuable stake in Cronos Group Inc. (NASDAQ:CRON), which was worth $50.3 million at the end of the third quarter. On the second spot was D E Shaw which amassed $9.3 million worth of shares. Citadel Investment Group, Citadel Investment Group, and OZ Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Chescapmanager LLC allocated the biggest weight to Cronos Group Inc. (NASDAQ:CRON), around 13.02% of its 13F portfolio. Valinor Management LLC is also relatively very bullish on the stock, earmarking 0.24 percent of its 13F equity portfolio to CRON.
Source 3: https://www.sec.gov/litigation/admin/2022/33-11123.pdf
Between 2019 and 2021, Cronos furnished to and/or filed with the Commission, financial statements in three separate quarters that contained material accounting errors. In two of the three quarters—the first quarter of 2019 and the third quarter of 2019—Cronos improperly recognized revenue in connection with certain transactions with the same counter-party where the sale of cannabis raw materials (or cannabis flower) by Cronos occurred simultaneously with the purchase by Cronos of processed cannabis product. Separately, in the third quarter of 2019, a since terminated senior executive of Cronos entered into an undisclosed oral agreement with a different counter-party to sell cannabis raw material to the counter-party but then repurchase the cannabis product, either as a derivative product or in some other form, in the following quarter. This oral repurchase agreement made it inappropriate for Cronos to recognize revenue in connection with the sale transaction. Finally, in the second quarter of 2021, Cronos failed to timely record impairment charges in connection with goodwill and intangible assets associated with its U.S. reporting unit. As a result of the foregoing accounting errors, Cronos furnished to and/or filed with the Commission, periodic reports that contained materially inaccurate financial statements.
From May 2020 13f: https://www.sec.gov/Archives/edgar/data/1423053/000095012320005339/xslForm13F_X01/form13fInfoTable.xml
1,149,228 SH
942,600 SH Call
409,700 SH Put
TL:DRS
Is Citadel aware that their investment (one of the biggest hf's in the company at the time) overlaps in the period between 2019 and 2021 when Cronos is now known to have submitted financial statements with the SEC that contained material accounting errors related to, among other things, revenue recognition and goodwill impairment?
