Canadian securities regulators on Friday ordered a halt intrading of securities of Sino-Forest, saying an investigation showedsigns that the Chinese forestry company may have engaged in fraud.
In its temporary order published on Friday, the Ontario Securities Commission said a staff investigation had found Sino-Forest (TRE-T 4.81 0.00 0.00%) and some of its officers and directors may have misrepresented revenue and exaggerated timber holdings in public filings.
The OSC ordered Chief Executive Allen Chan and four other executivesto resign as officers and directors of the Toronto-listed company.
"Sino-Forest, through its subsidiaries, appears to have engaged insignificant non-arms-length transactions which may have been contrary toOntario securities laws and the public interest," the OntarioSecurities Commission statement said.
Shares of Toronto-listed Sinoforest have tumbled more than 75 percentsince the beginning of June, when short-seller Carson Block said thecompany had fraudulently exaggerated the size of its forestry assets.
Sino-Forest has denied any wrongdoing and asked a committee of its independent board members to look into the allegations.
The company's internal probe was originally expected to end aroundmid-September, but last week Sino-Forest said the review into theallegations leveled by Block and his firm Muddy Waters would not wrap upuntil the end of the year.
The delay led rating agency Standard & Poor's for a second timeto lower its credit rating on the Chinese forestry company's debt.