TORONTO - The Ontario Securities Commission accused Chinese timberland company Sino-Forest Corp. of fraud and stopped trading of the company's Canadian-listed shares on Friday

"Sino-Forest and certain of its officers and directors appear to have misrepresented some of its revenue and/or exaggerated some of its timber holdings," the Ontario regulator said in a temporary order.

The regulator had also initially ordered that Sino-Forest chief executive Allan Chan and four other executives resign, but later backed away from the demand as it said it overstepped its authority under a temporary order.

Temporary orders last for 15 days, but may be extended if a hearing is started within the period.

The regulator said it made the move against Sino-Forest without first holding a hearing because the time required could be "prejudicial to the public interest."

Shares in Sino-Forest (TSX:TRE) last traded on the Toronto Stock Exchange for $4.81, however the stock plunged 70 per cent in U.S. trading.

The allegations have not been proven in court and calls to the company seeking comment were not immediately returned.

The OSC order comes after a short-seller Muddy Waters Research made similar allegations earlier this summer.

According to the order signed by OSC chairman Howard Wetston, the company and certain of its officers and directors, including Chan, appeared to be engaging in acts that they knew or reasonably ought to have known were fraudulent.

Sino-Forest launched an investigation by an independent committee earlier this year after the allegations were first made by Muddy Waters and its research director Carson Block.

"We believe that the OSC's action in suspending trading in Sino-Forest is a major positive in that the commission is protecting investors from making uninformed decisions in a highly volatile stock," Block said Friday.

"Our conviction that Sino-Forest is a fraud has not wavered since we issued our report, and we look forward to seeing justice done."

The company said last week 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 year.

The stock, which traded for more than $14 before the allegations, fell to as low at $1.29.

However, the shares had recovered some of their value in recent weeks as some investors bet the company would be cleared of the allegations.

New Zealand billionaire Richard Chandler held an 18 per cent stake in Sino-Forest as of Aug. 4, according to data compiled by Thomson Reuters.

The OSC said Sino-Forest has raised approximately $2.986 billion from public investment and debt securities issues since 2003, including four public offerings between 2004 and 2009 which approximately raised $1.05 billion.