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Audit firm Ernst & Young to pay $8 million to settle with Ontario regulator(Canadian Press DataFile Via Acquire Media NewsEdge) TORONTO - The Ontario Securities Commission has approved two settlement agreements with accounting firm Ernst & Young LLP, which has agreed to pay $8 million without admitting nor denying allegations that it mishandled audits of two Chinese companies listed on Canadian stock markets, including Sino-Forest Corp. The decision comes about a week after the OSC reached an initial agreement with Sino-Forest, which was listed on the Toronto Stock Exchange, and Zungui Haixi Corp., an unrelated sportswear maker once listed on the TSX Venture Exchange. Both settlement agreements were entered into on a no-contest basis, but still required a hearing by an independent panel to consider whether the settlements are in the public interest. In the case of Sino-Forest, a $6.5 million settlement was reached after the auditor was accused of failing to meet industry standards through its accounting measures, and failing to verify the existence of some of the company's key assets. Sino-Forest was once the most valuable forestry company on the Toronto Stock Exchange with a market cap of more than $6 billion. But in 2011 it became embroiled in a scandal over its finances after investment firm Muddy Waters Research released a report that labelled the company as a complex Ponzi scheme. The report prompted investigations by the Ontario regulator and the RCMP. Sino-Forest filed for bankruptcy protection the following year, and is now controlled by its bondholders under a different entity called Emerald Plantation Holdings Ltd. Meanwhile, the OSC is also involved in a separate fraud hearing involving allegations that former Sino-Forest executives lied to investors and attempted to mislead investigators. Separately, in the $1.5 million Zungui Haixi settlement, the auditor was accused of failing to respond to clear signs the company was at risk of fraud in two separate instances. © 2014 The Canadian Press. All rights reserved. |