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by Mike Caswell

The Ontario Securities Commission has reached a $700,000 settlement with David Horsley, the former chief financial officer of Sino-Forest Corp., a one-time $6-billion Chinese forester that collapsed amidst allegations of financial improprieties. Mr. Horsley agreed to the fine at a hearing the OSC held on the morning of Monday, July 21. In addition to paying $700,000, he has accepted a permanent officer and director ban.

In settling the case, Mr. Horsley has admitted that even though he was Sino-Forest's CFO, he had little first-hand knowledge of the company's operations. He placed undue reliance on overseas management (who the OSC accuses of carrying out the fraud). The company's purported operations were almost entirely in China, yet Mr. Horsley spoke no Chinese dialects and did not live in the country. He now realizes that the company harvested little or no timber.

The settlement comes about three years after Sino-Forest collapsed. On June 2, 2011, a short-seller reported that the company's assets were massively exaggerated, and within days the stock fell to $5.23 from $18.21. The Toronto Stock Exchange eventually delisted the company, and it is now defunct.

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