22:46:23 EST Fri 15 Feb 2019
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Ontario Securities Commission
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OSC orders former Sino-Forest chairman to pay $65.2M

2018-07-11 20:12 ET - Street Wire

Also Street Wire (C-TRE) Sino-Forest Corp

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by Mike Caswell

The Ontario Securities Commission has imposed fines and disgorgement totalling $65.2-million on Allen Chan, who was the chairman of Toronto Stock Exchange listing Sino-Forest Corp. as it massively overstated its assets and sales over several years. His conduct "unquestionably involves among the most serious of harms to investors," resulting in $6-billion in losses, the regulator has determined. He used his position to reap $38.1-million in gains from a takeover and collected $22-million in salary, the OSC has determined.

The penalties, announced by the OSC on Wednesday, July 11, stem from the 2011 collapse of Sino-Forest. The OSC said that Sino-Forest and its management deceived investors for years about the company's financial condition. Among other things, Sino-Forest reported assets that it did not own and sales contracts that had no economic substance.

(While the OSC undoubtedly did much work, the scheme was first exposed through a report issued by short-seller Carson Block. He concluded that the company had "always been a fraud" and that it had massively overstated its assets. The stock fell to $5.23 in the days following his report, down from $18.21. The TSX has since delisted the company.)

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