Sino-Forest CEO resigns over fraud allegations

Sino-Forest (TRE.TSE) announced that the company’s founder, chairman and chief executive Allen Chan resigned on Sunday, and that three employees have been suspended pending review of fraud allegations by Canadian regulators, the Wall Street Journal reported. Research firm Muddy Waters accused the forestry company of falsifying revenues and misrepresenting timber holdings in a report issued two months ago. The Ontario Securities Commission ordered a halt to trading on shares of Sino-Forest on Friday. It said that Sino-Forest also appears to have engaged in related-party transactions. It also ordered the resignations of Chan, head of Development and Operations Albert Ip, Vice President for Finance George Ho and Vice President for Operations Simon Yeung – but then retracted the order, saying a hearing was required. An anonymous source said that the latter three employees were the ones suspended over the weekend. Sino-Forest’s stock is down 72% for the year.