Court Interprets CFO's Class Action Settlement Narrowly

In a decision released February 19, 2016 in Trustees of the Labourers' Pension Fund v. Sino-Forest Corporation (Re), 2016 ONSC 1156, Justice Morawetz held that a settlement approved between the former CFO of Sino-Forest Corporation, David Horsley, and representative plaintiffs did not preclude the pursuit of disciplinary proceedings against Mr. Horsley by the Chartered Professional Accountants of Ontario ("CPAO"). The underlying class action initiated in 2011 concerned allegations of secondary market securities misrepresentations. Sino-Forest later filed under the Companies' Creditors Arrangement Act ("CCAA"). In detailed reasons, Morawetz J. found that the CPAO was not embraced by the defined parties to the class action settlement, nor did the CPAO proceeding constitute a "claim" under the related CCAA plan of compromise and reorganization. A link to the decision is found below: