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ARTICLE · 15 JULY 2019

Sino-Forest Cont'd: Cultural Practices Do Not Excuse Illegal Acts

The Divisional Court found this conclusion to be reasonable.

CanadaCorporate/Commercial Law

In Hung et al v Ontario (Securities Commission), 2019 ONSC 3423, the Divisional Court dismissed an appeal brought by four senior officers of Sino-Forest Corporation (the Appellants) in one of Canada's largest frauds in history. The Appellants sought to set aside the decision on the merits of a panel of the Ontario Securities Commission (OSC) dated July 13, 2017 (Merits Decision), and set aside or amend the decision of a second Panel on sanctions dated July 9, 2018 (Sanctions Decision). In the alternative, the Appellants sought to remit the matter back to the Commission for rehearing with respect to both decisions.

As discussed in our previous commentary, the OSC Panel found that the Appellants, among others, engaged in deceitful and dishonest conduct related to Sino-Forest's standing timber assets and revenues knowing they constituted fraud, contrary to s. 126.1 of the Ontario Securities Act (the Act).

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