Canadian law firms Siskinds LLP and Koskie Minsky LLP, class counsel in the Sino-Forest class action, have announced a C$117 million (US$117.6 million) settlement with Ernst & Young LLP in the Sino-Forest class action.
Ernst & Young LLP was Sino-Forest's auditor from August 16, 2007 until its resignation on April 4, 2012.
The class action alleges that Sino-Forest, certain of its directors and officers, auditors and underwriters mislead investors concerning the business and accounting at the collapsed timber trader.
The settlement is the largest settlement by an auditor in Canadian history, by a large margin, and is one of the largest-ever auditor settlements worldwide.
"Our clients are pleased with this result and we look forward to aggressively prosecuting the action against the remaining defendants," says Kirk Baert, partner at Koskie Minsky.
Failure to Conduct Proper Audit Work
Meanwhile, the Ontario Securities Commission has accused Ernst & Young LLP of failing to conduct a proper audit of Sino-Forest Corp.
The OSC alleges that the audits performed by Ernst & Young on Sino-Forest’s consolidated financial statements for 2007, 2008, 2009 and 2010 “failed to meet relevant industry standards.”
Ernst & Young has denied the allegations, saying its work met all professional standards.
“The evidence we will present to the OSC will show that Ernst & Young Canada did extensive audit work to verify ownership and existence of Sino-Forest’s timber assets,” it said.