Canadian Regulator Suspends Trading In Sino-Forest Shares

Aug 29 2011 | 2:07pm ET

The Ontario Securities Commission has ruled that Chinese timber company Sino-Forest may have defrauded investors—like hedge fund manager John Paulson—by exaggerating its assets.

The OSC stopped all trading in Sino-Forest shares on Friday, saying the company "appears to have engaged in significant non-arm’s length transactions which may have been contrary to Ontario securities laws and the public interest,” reports the CBC.

The regulator accuses officers and directors at the company of "engaging or participating in acts…which they know…perpetuate a fraud."

The OSC originally ordered the company’s directors and executives to resign, says the CBC, but at midday on Friday, issued a second release removing that demand. OSC spokesperson Wendy Day told the Canadian broadcaster the commission was “persuaded” to rescind the resignation order but didn’t say who did the persuading.

The decision validates the views of U.S. short seller and research firm Muddy Waters which called out Sino-Forest as a giant fraud in June. Since the release of the Muddy Waters report, Sino-Forest’s value has plummeted to C$700 million from C$4.7 billion.


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...