Carson Block praises Ontario Securities Commission for freezing trading of Sino-Forest shares, says move will protect investors
August 26, 2011
– Muddy Waters founder Carson Block has appeared on Canada’s BNN television network to comment on the Ontario Securities Commission's (OSC) order to freeze trading of Sino-Forest Corp. shares.
The order, issued on Friday, also demands the resignation of five of the company's top executives, Bloomberg reported.
Short seller Block's research company first made accusations against Sino-Forest in a report in June, which alleged that Hong Kong and Mississauga, Ontario-based Sino-Forest had overstated timberland holdings.
Sino-Forest's assistant manager of investor relations Charlotte Cheung said at the time that Sino-Forest had set up a special committee to deal with the accusations. Referring to that investigation, Block said he had every reason to believe that it was proceeding in good faith. "Everything I’ve seen from these independent directors shows that they’re serious about this investigation,” he said.
Block said he did not know whether Sino-Forest had been in communication with the OSC but it was his understanding that the company can challenge the order, which would lead to a public hearing.
Block said the OSC's order to suspend trading was a positive move and would protect investors. "All of us at Muddy Waters were alarmed when we saw that investors were paying up to C$6, C$7, even C$2 a share to own this, when we know that it’s a fraud,” he added.
According to Block, billionaire Richard Chandler's decision to raise his stake in Sino-Forest had been interpreted by investors as affirmation of the company’s financial statements.
The primary source of this article is Bloomberg, New York, on Aug. 26, 2011.