Canadian Regulators Block Trading Of Sino-Forest


Canadian regulators just halted trading in shares of Sino-Forest, saying the Hong Kong- and Mississauga, Ontario-based timberland company may have engaged in fraud.

“Sino-Forest, through its subsidiaries, appears to have engaged in significant non-arms-length transactions which may have been contrary to Ontario securities laws and the public interest,” the Ontario Securities Commission said in its order.

Back in June, Sino-Forest’s stock price plummeted after short seller Carson Block‘s research firm Muddy Waters said in a report that Sino-Forest had overstated its timberland holdings. Sino-Forest denied the allegations.

This caused John Paulson, who was one of the largest shareholders in Sino-Forest, to lose millions.  Paulson has since sold out of the stock.

This week, Sino-Forest had its credit rating downgraded to a B from a B+ by Standard & Poor’s Ratings because of a delay to an investigation into fraud allegations.