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From 2010 to 2012, 68 companies based in China became subject to U.S. securities class-action lawsuits. One of the largest recoveries came in Canada, where Ernst & Young agreed to pay $117-million to settle a lawsuit by investors in the Chinese timber company Sino-Forest Corp. (Adam Dean For The Globe and Mail)
From 2010 to 2012, 68 companies based in China became subject to U.S. securities class-action lawsuits. One of the largest recoveries came in Canada, where Ernst & Young agreed to pay $117-million to settle a lawsuit by investors in the Chinese timber company Sino-Forest Corp. (Adam Dean For The Globe and Mail)

SinoTech, banks to pay $20-million to end shareholder lawsuit Add to ...

SinoTech Energy Ltd. and three banks that underwrote its initial public offering have agreed to pay $20-million to settle a shareholder lawsuit accusing the Chinese oil field services company of defrauding investors.

The settlement, disclosed in filings late Monday in Manhattan federal court, would mark one of the largest recoveries in a series of U.S. lawsuits filed since 2010 over alleged accounting fraud at China-based companies whose shares trade in the United States.

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Under the settlement, SinoTech would pay $2-million to investors who bought its shares from November 2010 to August 2011. Citigroup Inc., Lazard Capital Markets and UBS AG would pay another $18-million.

The accord does not resolve claims against the auditor Ernst & Young, which continues to fight the lawsuit, court papers show. The settlement must be approved by U.S. District Judge Alison Nathan.

Citigroup declined comment. Representatives for the other settling defendants did not respond to requests for comment.

The lawsuit, seeking class-action status, was filed in 2011 after a report by short sellers on Alfredlittle.com raised questions about SinoTech’s business. The report alleged that SinoTech’s largest suppliers and customers were shell companies.

The plaintiffs contended that SinoTech’s prospectus contained untrue statements and omitted material information, and that the defendants later issued false and misleading statements that inflated its stock price.

In October 2011, Nasdaq suspended trading in SinoTech, 11 months after the company raised $167-million in its IPO. It was formally delisted in January 2012.

The U.S. Securities and Exchange Commission separately sued SinoTech and its executives for securities fraud in April 2012. The SEC reached settlements with SinoTech and two executives in December, according to court papers.

Many U.S.-listed Chinese companies have seen their accounting practices come under scrutiny in recent years. From 2010 to 2012, 68 companies based in China became subject to U.S. securities class-action lawsuits, NERA Economic Consulting said in a report in January.

A handful of cases have settled, although the dollar amounts are comparatively small.

In January, A-Power Energy Generation Systems Ltd., some executives and its auditor agreed to a nearly $3.7-million settlement.

Wonder Auto Technologies Inc., which has been delisted, in January agreed to a $3-million settlement.

Other settlements have included a $2-million accord with Orient Paper Inc., an $800,000 settlement with China Shenghuo Pharmaceutical Holdings Inc., and a $2.15-million settlement favouring investors in Fuwei Films (Holdings) Co. Ltd.

One of the largest recoveries came in Canada, where Ernst & Young agreed to pay $117-million (Canadian) to settle a lawsuit by investors in the Chinese timber company Sino-Forest Corp.

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