Tim­ber com­pany de­frauded, mis­led in­vestors: court

The Guardian (Charlottetown) - - BUSINESS -

Tim­ber com­pany Sino-For­est and sev­eral of its top ex­ec­u­tives de­frauded in­vestors and mis­led in­ves­ti­ga­tors, the On­tario Se­cu­ri­ties Com­mis­sion ruled in one of Canada’s largest cor­po­rate fraud cases.

In a nearly 300-page de­ci­sion re­leased Fri­day, the reg­u­la­tor said the com­pany as well as for­mer chief ex­ec­u­tive Allen Chan “en­gaged in de­ceit­ful or dis­hon­est con­duct re­lated to Sino-For­est’s stand­ing tim­ber as­sets and rev­enue they knew con­sti­tuted fraud.”

In ad­di­tion, Al­bert Ip, Al­fred Hung and Ge­orge Ho were also found to have de­frauded in­vestors by over­stat­ing the now de­funct com­pany’s as­sets and rev­enue.

Al­le­ga­tions of fraud against Si­mon Ye­ung were dis­missed, but the reg­u­la­tor ruled he mis­led staff dur­ing their in­ves­ti­ga­tion.

The in­ves­ti­ga­tion into Si­noFor­est was trig­gered in 2011 when Muddy Wa­ters Re­search’s Car­son Block, a short-seller, called the com­pany a Ponzi scheme.

Block cheered the de­ci­sion Fri­day.

“We ap­plaud the OSC for per­sist­ing through an un­doubt­edly com­plex in­ves­ti­ga­tion and hear­ing to see that jus­tice is served,” Block wrote in an email.

“It’s im­por­tant to re­mem­ber that our re­port was ini­tially quite con­tro­ver­sial and met with a good deal of hos­til­ity at a time when the free­dom of speech is un­der threat, this out­come is a re­minder of the value of crit­i­cal voices and free­dom of ex­pres­sion.”

The for­mer ex­ec­u­tives now face the pos­si­bil­ity of be­ing per­ma­nently banned from Canada’s cap­i­tal mar­kets, or fined up to $1 mil­lion for each fail­ure to com­ply with On­tario se­cu­ri­ties law.

A sep­a­rate hear­ing on sanc­tions and costs has not been set.

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