TORONTO—Two institutions have filed a class action lawsuit alleging that misconduct led to stock price declines of Toronto-based Sino-Forest Corp., whose trading has been suspended by the Ontario Securities Commission.

The lawsuit, which seeks $5.8 billion, was filed Monday in Ontario's Supreme Court by Toronto-based Northwest & Ethical Investments L.P., a mutual fund manager, and by Quebec-based Comité syndical national de retraite Bâtirente Inc., a labor-sponsored retirement system.

It was filed on behalf of investors who purchased Sino-Forest shares or notes from August, 17, 2004, through June 2, 2011.

The lawsuit alleges that the defendants “fundamentally misrepresented the integrity of Sino-Forest's business operations and financial reporting, and materially overstated its assets and financial results,” according to a statement by the plaintiffs.

20 executives, directors named

Defendants in the lawsuit include Sino-Forest's current and former auditors, 15 financial firms that brought Sino-Forest note offerings to market, certain forestry consulting firms and 20 of the company's directors and executive officers, the plaintiffs said in a statement.

Sino-Forest operates commercial forest plantations in China.

Sino-Forest's securities suffered severe market declines after an analyst's report in June questioned the integrity of its asset valuations, revenues, business practices and financial reporting, according to the plaintiffs.

The Ontario Securities Commission ordered that Sino-Forest's trading of securities be suspended in August. The commission said in its order that the company “appears to have engaged in significant no-arm's-length transactions which may have been contrary to Ontario securities laws and the public interest.”

It also said the company and certain officers and directors “appear to have misrepresented some of its revenue and/or exaggerated some of its timber holdings” by providing false or misleading information. In addition, it said, then-Chairman, CEO and Director Allen Chan appears to have engaged in fraud.

Sino-Forest has raised about $3 billion from public investment and/or debt securities issues since 2003, including four public offerings between 2004 and 2009 that raised about $1.05 billion, according to the commission.

Top executive resigns

Two days after the commission's announcement, Sino-Forest announced that Mr. Chan had voluntarily resigned pending completion of an independent committee's review of the analyst's allegations. William Ardell, lead director and chairman of the independent committee, was named chairman; and Judson Martin, executive director and the company's vice chairman, was named CEO. The company said it also placed three employees on administrative leave.

In its August announcement, Sino-Forest said that its business is complex, “the scope of the review is significant and there are enormous amounts of data that have been marshaled and are under review. In these circumstances, the independent committee has not yet reached any conclusions.” It said also it is cooperating with the commission.

A company spokeswoman had no comment on the lawsuit.