Sino-Forest Corp Options Holders Allowed to Exercise Put Contracts, OSC Rules
The Ontario Securities Commission agreed to modify a temporary trading ban on Sino-Forest Corp. (TRE.TO) shares to allow some outstanding options to be exercised, Bloomberg reported.
It said the Canadian Derivatives Clearing Corp. petitioned the Ontario regulator in a Sept. 14 hearing to allow the exercising of some put contracts linked to Sino-Forest shares. A put is an agreement that gives the holder the right to sell a security for a certain amount by a set date.
Canada's main regulator said it was "satisfied that it would not be prejudicial to the public interest" to modify the order, according to a notice posted yesterday on its website, Bloomberg reported.
In an order last week, the Toronto-based regulator extended a trading ban on Sino-Forest shares to Jan. 25 as it investigates allegations of fraud at the Chinese tree-plantation operator. The OSC ordered the cease-trade order on Aug. 26 and said that officers and directors of Hong Kong- and Mississauga, Ontario-based Sino-Forest may have engaged in acts "related to its securities" that they "knew or should have known" perpetrated a fraud.
The change won't allow holders of put contracts who don't already own Sino-Forest shares to buy stock to make delivery upon exercise, the OSC said. Holders of the put contracts who are current or former directors or officers of Sino-Forest and its units, or anyone with more than 10% of the company stock, can't sell shares under the puts, the regulator said.
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