Sino-Forest Feels Heat in Canada
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Canada's largest securities regulator alleged Tuesday that Sino-Forest Corp. and certain former executives inflated timber purchases and sales, capping an 11-month investigation into the troubled forest-products company, The Wall Street Journal Deals & Deal Makers blog reported. The Ontario Securities Commission signaled last month it would file fraud allegations against the company, after issuing a so-called enforcement notice. A spokesman for Sino-Forest, which conducts most of its business in China, declined to comment. The allegations mark the latest setback for Sino-Forest, once one of the largest forestry-products companies listed in Canada. Last June, U.S. short-seller Muddy Waters LLC issued a report alleging the company had fraudulently exaggerated the value of its plantation assets. The company denied the allegations, but also said it would probe them. Amid the internal probe, shareholders abandoned the company, and the OSC started its own investigation. The Toronto Stock Exchange delisted the company and the company sought out bankruptcy-court protection in March. Last August amid the OSC probe, the regulator said the company and some of its officials appeared to have misrepresented revenue and exaggerated its holdings, which the regulator said may have been false or misleading. The Royal Canadian Mounted Police also opened an investigation. Read more. (Subscription required.)