Canadian securities regulators on Friday ordered a halt in trading of securities of Sino-Forest, saying an investigation showed signs 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) 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 executives to resign as officers and directors of the Toronto-listed company.
"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 statement said.
Shares of Toronto-listed Sinoforest have tumbled more than 75 percent since the beginning of June, when short-seller Carson Block said the company 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 around mid-September, but last week Sino-Forest said the review into the allegations leveled by Block and his firm Muddy Waters would not wrap up until the end of the year.
The delay led rating agency Standard & Poor's for a second time to lower its credit rating on the Chinese forestry company's debt.