TORONTO - Toronto-based Sino-Forest Corp. misled investors as it reached $3 billion between 2003 and 2010, says the Ontario Securities Commission in a report issued July 14.
The lumber and panel manufacturer traded on the Toronto Stock Exchange until its collapse under bankruptcy in 2012. Investment advisor Muddy Waters Research uncovered the fraud in a series of reports that showed Sino-Forest's claim to land holdings in China were untrue, since the lands were government-owned.
In 2012, Sino-Forest received approval by a Canadian court for a bankruptcy filing, with plans to sell its vertically-integrated operations, including forestry, saw mills and floor manufacturing. Sino-Forest then launched a $4 billion anti-defamation suit against Muddy Waters and the author of the report, Carson Block. Among stock holders was U.S. investment firm Paulson & Co., which recorded a $500 million loss on Sino-Forest holdings in 2011.
The decision by the Ontario Securites Commission which is being widely reported, said CEO Allen Chan, and three vice presidents - Albert Ip, Alfred Hng, and George Ho - were responsible for the fraudulent plan. The commission will meet to determine penalities, which could be $1 million per infraction.