The Ontario Securities Commission has extended an order that ceased trading in shares of Sino-Forest by another four months, saying it needs more time to finish its investigation into allegations of fraud against the troubled timber company.

The OSC inquiry is taking longer than anticipated due to the complexity of Sino-Forest's operations, the market regulator said Thursday during a hearing to decide how long Sino-Forest shares will remain halted on the Toronto Stock Exchange.

OSC lawyer Karen Manarin said the extension is important to avoid jeopardizing the labour-intensive investigation, which requires interviewing witnesses with interpreters, reviewing thousands of documents written in Chinese, and the gathering of information from 150 subsidiaries registered in far-flung locations from China to the British Virgin islands.


Sino-Forest shares have been halted on the TSX. (Sino-Forest Corp.)

She said not extending the halt would mean that the "integrity of capital markets may be compromised," adding that the OSC cannot release more details, because that could compromise the investigation

Sino-Forest told the hearing it will consent to the extension of the cease-trade order, which stopped trading in its stock beginning in late August. Under the proposed extension, its stock would remain halted for another four months, until Jan. 25.

Shares in Sino-Forest — once the most valuable forestry company listed on the Toronto Stock Exchange — were hammered this summer after short-seller Muddy Waters Research first alleged that it had exaggerated sales and assets.

None of the allegations have been proven.

The initial OSC order restricts the trading by several Sino-Forest executives, including former chief executive Allen Chan, until at least Jan. 25, 2012.

Chan resigned last month, two days after the OSC announced its temporary order. The company also placed three employees on administrative leave and relieved them of their duties.


Chart for Sino-Forest shares on the TSX ((CBC))

The company has launched its own an investigation by an independent committee. However, Sino-Forest recently said that its investigation would take longer than the two to three months that was initially predicted and is now expected to be complete by the end of the year.

Sino-Forest named William Ardell, the lead director investigating the fraud allegations, as chairman of the company and Judson Martin, currently vice-chairman, as CEO. Chan was named founding chairman emeritus.

Sino-Forest has raised about $3 billion from the sale of shares and corporate debt issues since 2003 — bought by Canadian, American and international investors.

Its stock, which traded for more than $14 before the allegations were first made by Muddy Waters, had fallen to as low as $1.29, but recovered before the halt to last trade at $4.81.