Chloe Liang's Comm 101 Section 101 Blog

Sino-Forest Corporation was once the largest publicly traded Chinese forest-products company listed on the Toronto Stock Exchange with a market cap of $6 billion. Since 1994, the company primarily engages in the acquisition, cultivation and sale of wood fiber, timber trading, and manufacturing. However, the company’s chief executive has stepped down, after the Ontario Securities Commission accused the company of potential fraud and suspended trading in its shares on the TSX. This comes after an allegation that Sino-Forest was overstating the amount of timber it owned, published by Muddy Waters Research, a firm that “sees through appearances to a Chinese company’s true worth”, and which shorted Sino-Forest’s stock. However, the fact that Muddy Waters only exposed the fraud to short sell the stock while raking in immense profits is disgustingly immoral. Thousands of shareholders lost their life-savings as the stock plummeted from its highest at $26.64 in March to becoming worthless. Justice may have been served but the regulators should have forewarned large brokers and give them a chance to “buy out” the report because the real victims are ordinary citizens who have entrusted their money in the wrong hands. Sometimes, justice does more harm than good to people.

http://www.theglobeandmail.com/globe-investor/sinoforest/osc-alleges-fraud-at-sino-forest/article2143054/

Picture source: http://beta.images.theglobeandmail.com/archive/01312/WEB-forest_jpg_1312916cl-8.jpg