Oct. 14 (Bloomberg) -- Sino-Forest Corp., the China tree- plantation operator accused of fraud, said it received a request from a shareholder to start to sue certain executives barred by the Ontario Securities Commission from trading the shares.
“The request indicated that, if the company does not agree to commence legal proceedings as demanded, the purported shareholder may seek court approval to commence such proceedings in the name of the company,” Sino-Forest said today in a statement.
The OSC, Canada’s main securities watchdog, suspended trading of Sino-Forest shares on Aug. 26 and said some officers and directors of Sino-Forest may have engaged in acts “related to its securities” that they “knew or should have known” perpetuated a fraud.
The OSC also ordered then-Chief Executive Officer Allen Chan and Vice Presidents Albert Ip, Alfred C.T. Hung, George Ho, and Simon Yeung from trading company shares.
Short seller Carson Block’s Muddy Waters LLC published a report on June 2 alleging that Sino-Forest, based in Hong Kong and Mississauga, Ontario, overstated its China timberland holdings. Sino-Forest executives have denied the allegations.
Sino-Forest has established an independent committee of directors to examine and respond to the Muddy Waters report. The company said Aug. 15 the investigation would take until the end of the year to complete.
Stan Neve, a New-York-based external spokesman for Sino- Forest, said company executives wouldn’t comment on the statement.
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