TORONTO – The Ontario Securities Commission approved a settlement agreement with former Sino-Forest Chief Financial Officer David Horsley.
Horsley admitted that, as CFO of Sino-Forest he permitted Sino-Forest to consistently make materially misleading disclosures. The Sino-Forest claimed to have large land holdings, when in fact these were largely leased from the Chinese government.
Horsley was Sino-Forest’s CFO from October 10, 2005 until his resignation as CFO on April 5, 2012 and was responsible for the oversight and integrity of all of the company’s financial affairs during that period.
As part of the settlement, Horsley admitted that, as CFO of Sino-Forest, he did not have the required knowledge of Sino-Forest’s business nor its operating environment and that he placed undue reliance on representations made by Sino-Forest’s overseas management. This led to a failure on his part to exercise the skill, care and diligence required of him as CFO of Sino-Forest. As a result, Horsley permitted Sino-Forest to consistently make materially misleading disclosure during his tenure as CFO. Further, Mr. Horsley acknowledged that he contravened Ontario securities law by providing incorrect or untrue information to OSC staff via written correspondence and that his certification of the annual and interim filings of Sino-Forest were contrary to the requirements of National Instrument 52-109.
“This matter underscores the critical role that CFOs play in the integrity of our market, as Mr. Horsley’s lack of care and understanding of his duties permitted Sino-Forest to make misleading and incorrect financial disclosure,” said Tom Atkinson, Director of Enforcement at the OSC. “Our next step is to proceed against the remaining respondents in the upcoming hearing on these serious allegations involving Sino-Forest. Horsley has agreed to testify in these proceedings.” As a result of the settlement agreement, Horsley is permanently banned from becoming or acting as a director or officer of any reporting issuer and is required to pay $700,000 toward the cost of Staff’s investigation.
On July 24, 2014, Horsley will seek court approval of a settlement of the civil proceedings brought against him as the CFO of Sino-Forest. If approved, Horsley’s civil settlement would provide an additional $5.6 million to former security holders in Sino-Forest. A copy of the Settlement Agreement and Order of the Commission in this matter are available on the OSC website at www.osc.gov.on.ca. The matter of Sino-Forest Corporation, Allen Chan, Albert Ip, Alfred C.T. Hung, George Ho and Simon Yeung will continue on September 2, 2014 at 10:00 a.m. at 20 Queen Street West, 17th floor.
The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets. Investors are urged to check the registration of any person or company offering an investment opportunity and to review the OSC’s investor materials available at www.osc.gov.on.ca.
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