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January 3, 2013

Sino-Forest shareholders dispute proposed settlement

Some shareholders of collapsed Chinese timber company listed in Canada, Sino-Forest, have opposed the proposed settlement by the company’s auditors Ernst & Young worth C$117m.

E&Y, together with executives of Sino-Forest, faces a class action brought by investors who claim the timber company overstated the size and value of its forestry assets and that its statements contained false and misleading information.

The majority of the shareholders have agreed to the settlement of the class action in November and the Superior Court of Justice of Ontario is to hold a hearing 4 February 2013.

However, some shareholders have an issue with agreeing to the E&Y settlement, which includes a clause that would prevent any further claims in relation to the case.

E&Y said the civil settlement does not involve "admission of liability" and that it "will resolve all potential civil claims relating to E&Y Canada’s audits of Sino-Forest Corporation."

E&Y also faces a separate investigation by the Ontario Securities Commission, in which the regulator maintains E&Y failed to conduct their audits in accordance with relevant industry standards. The hearing will be held on 7 January.

Related articlesE&Y Canada faces questions over timber firm audit

Related linksErnst & Young

E&Y’s settlement

Sino-Forest Corporation

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