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On January 9th ABC World News and Nightline featured a Brian Ross investigative report focused on Chinese stock fraud. A*L contributed to portions of the story and Jon Carnes is interviewed.
More mainstream media attention to the billions of investor dollars stolen by corrupt Chinese companies is probably what it will take to get U.S. securities regulators to take a tougher stand.
Following its fiscal 2nd quarter earnings release, on 11/14/12 Silvercorp Metals Inc. (NYSE: SVM) hosted a conference call with investors that ended abruptly after SVM Chairman and CEO Rui Feng chose to not accept questions from any investors in the queue.
The Q&A session began and ended with two questions from Brad Humphrey, a research analyst from Raymond James who has an “outperform” rating on SVM and whose employer seeks investment-banking fees from SVM. Then following a 15 second pause Rui Feng said “Ok, Jon[athan], so no questions [inaudible]” and Jonathan Hackshaw, Silvercorp’s IR Director replied “Yep” and the operator affirmed “there are no questions registered at this time.”
However, there were definitely more questions to be asked. I know at least four investors who entered the queue by pressing “*1” as instructed by the operator. Barring some bizarre system malfunction, in which case the call should have been rescheduled, SVM management simply did not allow any investors to ask questions on the call. Thus Rui Feng lied to investors by ending the call claiming there were no questions. I learned over my years of exposing Chinese stock frauds that legitimate public companies never engage in this type of deception.
The following is a list of questions that investors, including myself, deserve to have answered:
- What was the average head grade produced from the SGX mine this quarter? Why did you decide to stop reporting this key metric just as the grade went sharply lower last quarter?
- When and why did Lorne Waldman resign? Why did he stop signing SEC filings just prior to the exposure of lower grades and resources of the Ying (SGX) mine?
- What steps have you taken to confirm whether or not SVM management reimbursed the Luoyang police expenses, as verified by The Globe and Mail 9/8/12 special report?
- How do you explain the precise match, including misspellings and typos, between the contacts the Luoyang police took from Kun Huang’s laptop and the contacts your lawyers submitted in the New York Supreme Court filing?
- Why did you refuse to comment to The New York Times regarding the existence of the RCMP criminal investigation into SVM’s illegal payments to Chinese police?
SVM certainly has the right to refuse to answer questions from investors on its conference calls. However, lying to investors by claiming there are “no questions” is fraud. Rui Feng should have simply told the truth and announced “We are not taking questions from investors today.”
Disclosure: I am short SVM.
In today’s report I dig beneath the headlines to point out the recent reversal of fortune of Silvercorp Metals’ (NYSE: SVM) key SGX mine that accounted for 74% of SVM’s total production the last three years. SVM has done its best to mask the abrupt decline in the SGX mine from investors. Nevertheless, it is now clear that the SGX mine has much lower silver resource estimates than SVM previously disclosed and much lower grades of ore recently produced.
On 8/16/12 the New York Supreme Court’s Honorable Justice Carol R. Edmead dismissed Silvercorp Metals’ (NYSE: SVM) defamation lawsuit brought against numerous parties including myself. Justice Edmead found that my blog posts on Silvercorp were an expression of my opinion of the company and protected by my First Amendment right of free speech (the full text of her ruling can be found here). I applaud this decision that protects my rights and assures investors will continue to hear alternate viewpoints from bloggers who might otherwise be afraid to express negative opinions due to the threat of legal retaliation.
Over the past two and a half years I have publicly shared signs and evidence of fraud or questionable practices of over a dozen U.S. listed Chinese companies. I publicly accused seven companies of defrauding their investors. All seven have either been delisted or halted by the various stock exchanges where they traded. The SEC charged three of the companies and/or their management with fraud. My complete track record of all my reports can be found (here).
Three companies: Deer Consumer Products (NASDAQ: DEER), Sino Clean Energy (NASDAQ: SCEI) and Silvercorp Metals (NYSE: SVM) were the focus of Alfredlittle.com’s continued mission (announced 12/19/11) to expose fraud, corruption, and other crimes by managements who utilize threats, false arrests, violent force, kidnappings, corruption of foreign officials and abuse of the legal system to silence their critics and deprive them of their right of free speech and expression of their investment opinions. In addition to Justice Edmead’s dismissal of Silvercorp’s defamation lawsuit, I am very pleased to see that NASDAQ halted trading in DEER on 8/13/12 and announced its intent to delist SCEI on 8/7/12.
My efforts are now focused on Silvercorp. I plan to publish a new report later this week.
In September 2011 I published a series of reports on Alfredlittle.com that raised a number of serious questions regarding the size and quality of Silvercorp Metals’ (NYSE: SVM) Ying mine and pointed out numerous other red flags related to their Chinese mining business. SVM’s attempts to answer my questions only led to more questions. Unable to explain all the red flags I raised, SVM instead commenced a wasteful legal campaign spending millions of shareholder dollars attempting to censor, intimidate and silence its critics, one by one, into submission.
In China, SVM filed a criminal complaint (acknowledged here in this Chinese media report) with the public security bureau in the small town of Luoyang where SVM’s key operating subsidiary, Henan Found, is based. Under pressure, the local cops aggressively responded to SVM’s complaint and arrested, terrorized, and forbid my researchers from communicating with me or performing any further research on Chinese companies.
The local cops then confiscated all my researchers laptops and extracted all the data, including a copy of my own personal address book. Soon afterwards, a large number of phone numbers and addresses from my personal address book appeared in this New York Supreme Court filing (clearly cut and pasted, including capitalization and misspellings) in which SVM tried to persuade the Court to help the company illegally gain access to my confidential bank and brokerage account info.
Since SVM began targeting its critics, Rui Feng has avoided answering the tough questions from the U.S. and Canadian media. Meanwhile in China, Feng has conducted numerous interviews defending Chinese companies accused of fraud, even those that have been delisted or halted by the Exchanges. Feng bragged to the 21st Century Economic Herald that he had succeeded in shutting down my research effort preventing me from publishing any more negative reports on Chinese companies (link here). Feng’s Chinese media comments made him the “hero” of all the Chinese frauds that I busted in the past and the “patron saint” of fellow litigants Deer Consumer Products (NASDAQ: DEER) and SinoClean Energy (NASDAQ: SCEI – Halted). However, the recent halt of SCEI proves that Rui Feng’s campaign to silence me has failed and that I will continue speaking the truth and seeking justice.
Today’s report is the first in a new series that will raise more legitimate questions and reveal even more disturbing truths about SVM and its management.
CLICK BELOW TO DOWNLOAD TODAY’S COMPLETE REPORT:
Yesterday, the NASDAQ halted trading in Sino Clean Energy (SCEI) until the company “fully satisfied NASDAQ’s request for additional information.” I applaud the NASDAQ’s decision and hope this is the beginning of the end of SCEI Chairman Baowen Ren’s massive fraud against both U.S. and Chinese investors that I exhaustively reported here, here, here, here, here, here and here (complete report) using the pseudonym “Alfred Little” from April to June 2011. In today’s report I will show the reasons SCEI was halted and explain the latest egregious fraud perpetrated by SCEI’s Chairman Baowen Ren against his shareholders.