The settlement agreement recently entered into between Staff of the OSC and David Horsley, former CFO of Sino-Forest Corporation, provides meaningful guidance on the responsibilities of senior executives, particularly those serving for issuers with overseas business operations.
The settlement agreement outlines the weaknesses in Sino-Forest’s disclosures and controls, including the failure to disclose the relationships it had with certain suppliers and customers, the inability to confirm cash flows for most of its purchase and sale transactions, non-disclosure of the company’s high dependence on (and the weaknesses and risks associated with) certain commercial arrangements, and critical flaws in the documentation process (including backdating of agreements).
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