This class action concerns allegations that the public filings of Sino-Forest Corporation (“Sino-Forest”) contained false and/or misleading statements about its business and affairs. It is alleged that Sino-Forest falsely maintained that its financial statements complied with Canadian generally accepted accounting principles (GAAP) and it materially overstated the size and value of its forestry assets, including its holdings in China’s Yunnan province, and its revenue from the sale of those assets. The plaintiffs claim $6.5 billion on behalf of class members.
On June 2, 2011, Muddy Waters Research released a report alleging fraud and that Sino-Forest “massively exaggerates its assets”. Muddy Waters Research claimed to have “smoking gun evidence” of an example of Sino-Forest overstating forestry assets.
On August 26, 2011, the Ontario Securities Commission issued a temporary cease trade order against Sino-Forest, which prohibits all trading in the securities of Sino-Forest in Ontario. The order was initially effective for 15 days, but it has been extended and is currently effective to April 16, 2012.
On November 10, 2011, the Globe and Mail reported that the RCMP had launched a criminal investigation into whether executives of Sino-Forest defrauded Canadian investors.
On March 30, 2012, Sino-Forest Corporation sought and was granted protection from its creditors pursuant to the federal Companies’ Creditors Arrangement Act (CCAA). This is insolvency legislation and the initial order provides for a stay of legal proceedings against the company.
Sino-Forest’s shares were delisted from the TSX on May 9, 2012.
The action applies to anyone who purchased Sino securities between March 19, 2007 and June 2, 2011 (the “Class Period”) on the Toronto Stock Exchange or other secondary market in Canada. This includes securities purchased over-the-counter, and anyone who purchased Sino securities during the Class Period who reside in Canada or were a resident of Canada at the time of purchase and who acquired Sino securities outside of Canada. In addition, this includes anyone who purchased Sino securities during the Class Period by distribution in Canada in an Offering, or anyone who is a resident of Canada or who was a resident of Canada at the time of purchase and acquired Sino securities by offering outside of Canada.
Please note: the class definition excludes anyone
(a) who is a resident or who was domiciled in the Province of Quebec at the time they purchased Sino securities, and who are not precluded from participating in a class action by virtue of Article 999 of the Quebec Code of Civil Procedure, RSQ, c C-25; and
(b) who purchased a note during the Class Period and who sold the note during the Class Period.
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Koskie Minsky LLP and Siskinds LLP represent the plaintiffs in this action.
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