Board of trustees defending your pension interests in lawsuit against Sino-Forest

Sept. 15, 2011 - As savers and investors in Canada, we’re very fortunate. By world standards, we have a well-run, transparent system in which to save and invest our money. Our banking system is stable, our pension plans are well-regulated, and the public companies we invest in are audited by accountants and must meet high disclosure standards.

In short, Canadians – and pension funds – are able to invest with confidence knowing that, while there are no guarantees about the future prospects of any investment involving an ongoing business, the information we use to assess it is sound.

But every so often, we come across a situation in which someone takes advantage of the confidence people have in our system. And people make investments based on the integrity of the information they receive. And when this information is eventually revealed as being false, they lose money because the price of their investment typically goes down.

That’s what the Board of Trustees of the Labourers’ Pension Fund of Central and Eastern Canada is alleging in its lawsuit against Sino-Forest Corp. The Board is also suing the company’s top executives and directors, as well as auditor Ernst & Young and several investment banks that helped Sino-Forest raise money.

The Board of Trustees of the International Union of Operating Engineers Local 793 Pension Plan is also a plaintiff under the same lawsuit.

Why we’re suing Sino-Forest

Sino-Forest is a publicly traded commercial forest plantation operator. While the company is based in Canada, most of its operations are in China. The company had grown its business substantially over the past decade and had seen its stock price increase substantially during that time. Both the Labourers’ and Engineers pension plans bought shares in Sino-Forest from March 19, 2007, to June 2, 2011,which is the period covered by the lawsuit.

Unfortunately, a number of allegations against Sino-Forest have surfaced since that time. Our lawsuit alleges misconduct that reaches into almost every corner of Sino-Forest’s operations, including claims that the company and others named in the lawsuit misrepresented financial statements, backdated stock options and overstated forest holdings in China and elsewhere to investors.

While the total claim is for $6.5 billion, we estimate that the Labourers’ Pension Fund lost less than $3 million as a result of its investment in Sino Forest Corp.This represents only a small portion of the Fund that does not materially affect the total assets of the Fund.

While cases such as the Sino-Forest situation are relatively rare, the Board, as part of its ongoing fiduciary responsibilities, pursues any case in which it believes an individual or company has committed fraud or misrepresented investors on a public stock exchange and a loss to the Fund has resulted. Simply put, the Board does not accept losses that result from investors being mislead – and will aggressively pursue legal action in circumstances in which it believes investors have been misled. These legal actions are undertaken at no cost to the Fund as legal fees are ultimately paid from any settlement or court award.

It’s important to note that we are not only pursuing Sino-Forest and its senior management, but also the auditors and other advisors on which we and other investors have relied. It’s important that the professionals who serve companies like Sino-Forest – and whose professional opinion investors rely on – be held accountable for their role.

Stay tuned

Sino-Forest’s operations are still under investigation and more information will be forthcoming. As we learn more about the situation – and as our lawsuit moves through the court system – we’ll keep you informed about any new developments.

If you have any questions about our legal action against Sino-Forest in the meantime, please call 1-866-474-1739 or email sinoforestclassaction@kmlaw.ca.

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