In a recent post, we explained that the Ontario Securities Commission (“OSC”) had declared its intention to move forward with “no-contest settlements.” These agreements would permit the settlement of enforcement proceedings without requiring the respondent to admit to any misconduct.

Last week, the OSC announced that it had negotiated two no-contest settlement agreements with accounting firm Ernst & Young (“E&Y”). The agreements relate to cases in which E&Y had performed audit work for two now-defunct Chinese-based companies: Sino-Forest Corporation and Zungui Haixi Corporation. A hearing was held on September 30, 2014, during which a panel of OSC Commissioners approved the settlements.

E&Y previously entered into settlement agreements with Sino-Forest and Zungui investors. As such, in negotiating its agreements, the OSC took into account that E&Y had already agreed to pay $119 million to investors.  With respect to its work for Sino-Forest, E&Y agreed to pay $6.5 million to the OSC, of which approximately $1.5-2 million will be put toward reimbursing the OSC for expenses incurred during its investigation. The remainder will be allocated to third parties at the OSC’s discretion. The money may be used to fund causes related to the OSC’s work, such as an investor education fund. With respect to its work for Zungui, E&Y has agreed to pay $1.5 million.

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Photo of John Pirie John Pirie

John Pirie leads the Firm’s Canadian Litigation and Government Enforcement Group. He acts for clients in complex litigation and investigations. Mr. Pirie’s practice includes a significant fraud law and asset recovery component, often involving matters in the financial services industry. He routinely acts for our clients in coordination with other Baker McKenzie offices globally. Mr. Pirie has expertise concerning asset recovery strategies and emergency relief measures related to fraud, including Mareva injunctions, Anton Piller orders, Norwich Pharmacal orders, global asset tracing and fraudulent conveyance proceedings. Mr. Pirie has acted as lead counsel on an array of reported cases in this field, and he has been recognized in Lexpert’s Annual Guide to the Leading Canada/US Cross-Border Litigation Lawyers, and in the Legal 500 for Dispute Resolution (Canada). He appeared in the Supreme Court of Canada on a case ranked by Lexpert Magazine as Canada’s #1 business decision for 2007. Mr. Pirie has previously been named one of Lexpert’s Rising Stars, a “top 40” award that recognizes Canadian lawyers with an outstanding record of success.

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 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.