On September 2, 2014, the Ontario Securities Commission commenced its high-profile hearing in the case of the Sino-Forest Corporation (“SFC“). SFC is alleged to have engaged in widespread fraud relating to its public financial disclosure. The specific allegations involve the fabrication or overestimation of revenue and assets, falsified evidence of ownership, backdated contracts, and undisclosed control over particular customers and suppliers.

This case will bring about complex questions regarding the relationship between Ontario securities law and foreign business and government practices. In their opening statements, counsel for certain SFC executives asserted, in effect, that the allegations are founded on a lack of cultural fluency – a basic misunderstanding of Chinese business culture. The Panel will be asked to determine the appropriateness of viewing foreign practices through a Canadian regulatory lens.  At issue will be the conflicting objectives of the parties of, on one hand, protecting investors and preserving the integrity of Canadian stock exchanges and, on the other, recognizing the nuanced business realities that exist in other parts of the world.

We will continue to follow the matter closely and provide updates as events unfold.

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Photo of John Pirie John Pirie

John Pirie leads Baker McKenzie’s Canadian litigation and government enforcement group and is a member of the North American group’s Steering Committee. A Chambers ranked trial lawyer, he handles complex business disputes, investigations and white-collar matters, particularly those with multi-jurisdictional aspects. John’s focus…

John Pirie leads Baker McKenzie’s Canadian litigation and government enforcement group and is a member of the North American group’s Steering Committee. A Chambers ranked trial lawyer, he handles complex business disputes, investigations and white-collar matters, particularly those with multi-jurisdictional aspects. John’s focus includes a significant fraud and financial recovery component, having pursued and defended a range of leading cases in the area. He has deep experience with emergency relief measures, including global asset freeze orders and remedies available in bankruptcy and receivership. John has acted for governments, banks, investors, multinational corporations, officers and directors, a stock exchange, a securities regulator, members of the judiciary and an array of professionals. Clients interviewed by Chambers Global say: “John Pirie has an excellent command of the law and clients’ needs and expectations” and “he is an experienced courtroom advocate who is particularly well regarded for his civil fraud expertise.”

Photo of David Gadsden David Gadsden

David Gadsden has deep experience in fraud and financial crime matters.  He is counsel on multijurisdictional fraud investigations, including related civil disputes and regulatory proceedings.  David acted as counsel for a primary defendant in the Sino-Forest litigation, the largest securities fraud class action…

David Gadsden has deep experience in fraud and financial crime matters.  He is counsel on multijurisdictional fraud investigations, including related civil disputes and regulatory proceedings.  David acted as counsel for a primary defendant in the Sino-Forest litigation, the largest securities fraud class action in Canada.  He is known for his pragmatic advice on fraud prevention and investigations, and has extensive expertise in ‘Ponzi scheme’ litigation and asset recapture, including cross-border tracing, Anton Piller orders and Mareva injunctions.  David has been recognized as a “Litigator to Watch” in Lexpert’s annual Guide to the Leading US/Canada Cross-border Litigation Lawyers in Canada and has been ranked in Legal 500 for dispute resolution.