Toronto-listed Chinese tree plantation operator Sino-Forest Corp Tuesday blamed the plunge in its share price amid fraud allegations on the Canadian securities supervisor changing its statement, which unnerved investors.
The embattled Chinese firm said the statement issued by the Ontario Securities Commission late last Friday, which was later amended, was the reason that caused its share price to plunge more than 70 percent.
The OSC alleged in a statement that Sino-Forest and some of its senior executives "provided false revenue income figures and exaggerated its timber stockpile amount." The OSC further alleged in the statement that some Sino-Forest executives and directors may have engaged in acts "related to its securities" that they "knew or should have known" perpetuated a fraud.
It also demanded CEO Allen Chan and four other executives resign and ordered that they should not hold any senior positions in the company again in the future, the OSC statement stressed.
But the OSC later retracted the resignation order pending a hearing.
Sino-Forest tumbled 70 percent from US$5.1 to US$1.8 in the over-the-counter trading in the United States right after the statement was issued.
Sino-Forest said in its statement yesterday that according to Canada's securities laws, the OSC is entitled to ask senior executives of a company to resign only after a hearing has ruled the executives breached laws and compromised public interest.
"The order to ask our executives to leave is illegal without a hearing," Sino-Forest stressed.
Chan resigned on Sunday.
On Monday, Moody's and Standard & Poor's warned investors Sino-Forest may not be able to repay its nearly US$1.9-billion debt, and downgraded its unsecured debt.
