TORONTO, Aug 26 (Reuters) - Canadian securities regulators on Friday rescinded an order made earlier in the day for the chief executive of Sino-Forest <TRE.TO> and four other officers of the company to resign amid allegations of fraud.
The Ontario Securities Commission said all other terms of the temporary order remain in place. (Reporting by John McCrank and Pav Jordan; editing by Peter Galloway)
The OSC ordered all trading in Sino-Forest securities to cease and ordered several executives to resign, though it rescinded that order.
"It seems the OSC has some information investors do not that it believes is material to investment decisions," Block said. "I'm impressed with the progress the OSC has made so far."
Muddy Waters on June 2 issued a sharply negative report on Sino-Forest, accusing it of exaggerating the size of its forestry assets and sparking a massive decline in the shares.
"We're encouraged that it looks like the wheels of justice are turning," Block said, adding that while his firm faced criticism for its report, "at the end of the day, people who lost money in this are hurting a lot more from (Sino-Forest) than we are."
Shares of Sino-Forest slid 5.7 percent on Friday before being halted. They have plunged almost 74 percent since the close prior to the Muddy Waters report on June 2.
(Reporting by Ryan Vlastelica)
The fraud as Muddy Waters reported it, was that TRE was doing business with its own entities in many cases, and somehow showing revenues that really involved moving capital from one hand to the other of the same guy. That CHAN makes 11 million a year, orchestrating the scam is the real crime here.
The really sad part is that good honest companies based in CHINA , got beat up because of TRE scamming.
When TRE subsidiaries were listed, their offices were either low rent apartments with no office to be found or empty lots without a building even.
That was the red flag that told me something stunk bigtime. Given it is a lot harder to glean this kind of info in CHINA, but there are may intelligent folks in China who speak english very fluently who could have done some investigating. I am positive this was how Muddy Waters came by some of the stuff he dug up.
Anybody thinking this is going to have a good ending for TRE shareholders is dreaming. The billionaire Richard Chandler , who lately grabbed a big % of TRE shares , is probably wondering "wtf was i thinking."
the investigation is taking place and the stock will be frozen for 15 days until they figure out the extent to whats going on. They initially attempted to get rid of the CEO's however, they do not have that power until a hearing is in place. This is set to happen within the next 15 days so right now, theres a lot of uncertainty.
The fraud as Muddy Waters reported it, was that TRE was doing business with its own entities in many cases, and somehow showing revenues that really involved moving capital from one hand to the other of the same guy. That CHAN makes 11 million a year, orchestrating the scam is the real crime here.
The really sad part is that good honest companies based in CHINA , got beat up because of TRE scamming.
When TRE subsidiaries were listed, their offices were either low rent apartments with no office to be found or empty lots without a building even.
That was the red flag that told me something stunk bigtime. Given it is a lot harder to glean this kind of info in CHINA, but there are may intelligent folks in China who speak english very fluently who could have done some investigating. I am positive this was how Muddy Waters came by some of the stuff he dug up.
Anybody thinking this is going to have a good ending for TRE shareholders is dreaming. The billionaire Richard Chandler , who lately grabbed a big % of TRE shares , is probably wondering "wtf was i thinking."
Well if Chandler sold , it wasnt reported to the exchange, as he is an insider and sales HAVE to be reported. While there is a lag to that data being filed, the TSX normally reports insider movements every day on the exchange. The latest from Canadian insider , shows Richard Chandler as still buying shares , the last buy reported was for a transaction on AUGust 24 , and reported on AUgust 25th.
IMO Chandler was left holding the bag, even billionaires make mistakes.
Rep date * Transaction date
Aug 25/11Aug 24/11**Richard Chandler Capital CorporationControl or Direction
| Common Shares | 10 - Acquisition in the public market | 1,200,000 | $4.654 | ||||
| Aug 11/11 | Aug 09/11** | Richard Chandler Capital Corporation | Control or Direction | Common Shares | 10 - Acquisition in the public market | 2,450,000 | $6.392 |
| Aug 05/11 | Aug 04/11 | Richard Chandler Capital Corporation | Control or Direction | Common Shares | 10 - Acquisition in the public market | 2,700,000 | $6.089 |
| Aug 05/11 | Aug 02/11 | Richard Chandler Capital Corporation | Control or Direction | Common Shares | 10 - Acquisition in the public market | 2,850,000 | $7.507 |
| Aug 03/11 | Jul 29/11 | Richard Chandler Capital Corporation | Control or Direction | Common Shares | 10 - Acquisition in the public market | 1,970,000 | $7.337 |
| Jul 27/11 | Jul 26/11 | Richard Chandler Capital Corporation | Control or Direction | Common Shares | 10 - Acquisition in the public market | 5,330,000 | $7.364
|
| Jul 26/11 | Jul 25/11 | Richard Chandler Capital Corporation | Control or Direction | Common Shares | 10 - Acquisition in the public market | 2,180,000 | $5.908 |
| Jul 26/11 | Jul 22/11 | Richard Chandler Capital Corporation | Control or Direction | Common Shares | 10 - Acquisition in the public market | 2,564,300 | $5.021 |
| Jul 20/11 | Jul 19/11 | Richard Chandler Capital Corporation | Control or Direction | Common Shares | 00 - Opening Balance-Initial SEDI Report |
|
|
| Jun 04/11 | May 31/11 | West, Garry | Direct Ownership | Rights DSU | 56 - Grant of rights | 454
|
i dunno ...this is my opinion, so noone jump down my throat..
I am not sold on it yet. Sino hired a new firm to also investigate the allegations and the OSC has said right now, it "appears" like fraud. The only reason why i am only 95% sold is because i cant bring myself to believe that Chandler kept dumping his money into a foreign company he hasnt done his DD on. Perhaps their are things we dont know? Chances are that they are fraud however, I want to hear the hearings before i can make any conclusions. Also, perhaps they do go under...I would imagine being such a large forestry company, they have significant amount of money in their assets. It may be a good opportunity for a smaller foresting company to take advantage of their situation.
The fact that the OSC suspended trading on TRE means that they have sufficient evidence uncovered to suggest fraudulent practices by Sino Forest . If they do no go under , there will be endless lawsuits and court battles. I would be very surprised if Chandler makes any coin off this gambit. BUT jmho.
TRE did have near a billion $ in the bank, however there was also significant liabilities. The forensic audit may uncover some real shady bookkeeping, but until we see the results it is all speculation.
ALLEN CHAN RESIGNS as CEO OF SINO-FOREST
TORONTO - Just days after the Ontario Securities Commission accused it of fraud and halted trading in its shares, the Chinese timberland company Sino-Forest has announced the resignation of its chairman and chief executive Allen Chan.
The regulator's move followed allegations by a short-seller earlier this summer that Sino-Forest (TSX:TRE) exaggerated its revenue and timber holdings.
The company said Sunday that William Ardell, who is investigating the allegations, has been named chairman. Judson Martin, currently vice-chairman, will become the new CEO.
The regulator said Friday that it had reason to believe Sino-Forest and certain officers and directors had misrepresented some of its revenue and/or exaggerated some of its timber holdings.
It also issued a cease-trade order for Sino-Forest shares, which have been battered by the allegations. They last traded Thursday at $4.81. Their 52-week range is $25.85 to $1.29.
Sino-Forest launched an investigation by an independent committee headed by Ardell earlier this year after the allegations were first made by Muddy Waters. The allegations have not been proven in court.
The company said last week that its investigation would take longer than the two to three months that was initially predicted and is now expected to be complete by the end of year.
"The three overriding priorities of the company are to complete the work of the independent committee, to co-operate with the OSC and to preserve shareholder value," Sino-Forest said Sunday.
The OSC had also initially ordered that Chan and four other executives resign, but later backed away from the requirement.
In addition to Chan's resignation, the company said it had placed three employees on administrative leave.
Sino-Forest sells timber and logs and manufactures downstream engineered-wood products.
By Peter Koven and David Pett
The Ontario Securities Commission’s extraordinary action against Sino-Forest Corp. could pave the way for years of legal wrangling as shareholders fight to get their money back.
Investors’ worst fears about the Chinese forestry company came closer to reality on Friday, as the regulator halted trading of the stock and said that officers and directors committed acts which they “know or reasonably ought to know perpetuate a fraud.”
The OSC order appears to support the key allegations that short seller Muddy Waters LLC made back in June. They seemed almost unbelievable at the time.
If the OSC is right (and it appears that the commission received information directly from Sino-Forest’s independent committee), experts said that there may be nothing for shareholders to recoup from the company. That puts a big bull’s-eye on the investment banks, auditors and analysts who have helped Sino-Forest raise almost $3-billion on Bay St. since 2003.
“To the extent that [shareholders] get anything back, they will be getting it from the banks who have the deepest pockets,” said Cristie Ford, an assistant professor at the University of British Columbia.
At the end of the second quarter, Sino-Forest had approximately US$862-million in cash on its balance sheet, which is less than half its unsecured debt of roughly US$1.8-billion. Should the company be liquidated, bondholders get first crack at getting their money back, potentially leaving next to nothing for shareholders.
However, class action lawyers already have the financial institutions in their sights.
“If ultimately the company doesn’t survive, its outstanding debt is a complicating factor, no doubt about it. But whether [shareholders] will be able to recover from other sources is a different question,” said Dimitri Lascaris, a partner at Siskinds LLP who is leading one of two major shareholder class actions against Sino-Forest.
The investment banks that raised money for Sino-Forest include Dundee Securities, TD Securities, Credit Suisse and Morgan Stanley. Ernst & Young was the auditor.
Anita Anand, a law professor at the University of Toronto, said the OSC’s cease trade order gives it the power to try a case against Sino-Forest, but does not allow the regulator to order restitution for shareholders. She said the commission’s Investor Advisory Panel, which she chairs, has recently recommended that the OSC implement an ability to award restitution.
“The whole subject of shareholder restitution is a big one and an important one,” said Ms. Anand. “It’s been kicking around, but not much action has been taken by the Commission or [the Ontario] government.”
is there anyone in this thread that is holding this one? ...trading on this is likely to be delayed past the 15 days. To be honest, it is the best thing. I don't think 15 days is enough to fully clear everything up. Even if it starts trading, it will be all speculative. I posted the article above explaining the further delay
I traded this stock once last week. I took a small loss and I'm SO GRATEFUL that I got out the next day. I feel for the longs because I know how it feels to lose a lot of money.
is there anyone in this thread that is holding this one? ...trading on this is likely to be delayed past the 15 days. To be honest, it is the best thing. I don't think 15 days is enough to fully clear everything up. Even if it starts trading, it will be all speculative. I posted the article above explaining the further delay
I traded twice, the first trade I did very well, but at that time I watched on the side lines and saw amazing swings and the news was positive. The second time, I got back in for another ride and could of got out with another great run, but with all the speculation I decided to hold on and see if this was really going to ride up to $10. It didn't and I got out breaking even.
After that, with the sideways movements and the unclear news, I felt like staying away until further news, would be a good idea. It obviously was!
I don't know what the price when trading commences will be like, but usually prices take a big dump and then a rebound, but this has some particular bad news attached to it, so I would be a bit concerned my self. See what Chandler does!!! If the price dives and he buys another huge position, then riding the coat tails might not be a bad idea.
Is there a limited amount of shares one person is allowed to hold in a company?
