Auditor to pay record sum over Sino-Forest accounts
Class-action group will be getting C$117 million from Ernst & Young which is not admitting liability
Ernst & Young has agreed to pay C$117 million (HK$912 million) to settle shareholder claims regarding its audits of Sino-Forest Corp, the tree-plantation company that filed for bankruptcy protection this year.
The settlement was announced on the same day that the Ontario Securities Commission, Canada's securities regulator, said Ernst & Young's audits of Hong Kong- and Ontario-based Sino-Forest were not in accordance with accounting industry standards.
The class-action settlement is the largest by an auditor in Canadian history and one of the biggest worldwide, Siskinds and Koskie Minsky, the law firms representing the shareholders, said.
The lawsuit alleges that Sino-Forest misled investors concerning the business and its accounting practices, the firms said.
Sino-Forest filed for bankruptcy protection in March after short-seller Carson Block's research firm Muddy Waters said in a June 2011 report the company overstated its assets.
Following the allegations, Sino-Forest's stock plunged 74 per cent in Toronto, wiping out about C$3.3 billion of market value by the time the shares were suspended in August 2011.