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.