MINING FINANCE / INVESTMENT
Alfredlittle.com anonymity begins to crumble in Silvercorp Metals shortselling saga
Silvercorp claims to have uncovered key drivers behind Alfredlittle.com, a website that has published damaging reports about the silver miner.
Posted: Tuesday , 10 Jan 2012
HALIFAX, NS -
For months it has been difficult to pin down the identity of those involved with Alfredlittle.com a website that has published reports short on Silvercorp, which after their release in late summer and early fall last year, drove down Silvercorp's shareprice. The shortselling claims, which Silvercorp has gone to great lengths to publicly disprove, were wide ranging and questioned, among other things, Silvercorp's credibility by alleging it inflated income, production and ore grade numbers from its silver mines in China.
In interviews, and, reportedly, in court appearances, the shortsellers associated with the website have been cagey, unwilling to reveal the names of the authors of the shortselling reports and the investors that were associated with them. One individual, calling himself Simon Moore, emerged as the chief spokesperson for the website Alfredlittle.com, which published a series of short reports on Silvercorp. In an interview with Mineweb last year Moore claimed anonymity was needed to shield the authors of the short reports from possible retribution by the Chinese government. He also said it was his understanding there was an investment fund behind the reports (no surprise there given Silvercorp short positions all of a sudden surged by some 10 percent mid last year) but Moore did not name them.
As for his own identity Moore was elusive on his location telling Mineweb only that he was California-based. Meanwhile, another shortselling website that publishes damning reports on Silvercorp, Chinastockwatch.com, and its alleged spokesperson, Jerry Katz, have proven impossible to contact for comment. Silvercorp, in suing its detractors last September, has said Katz is based in New York.
But this week Silvercorp made a more detailed account of those who it claims were involved with Alfredlittle.com in an amended complaint to New York's Supreme Court as part of a law suit in which Silvercorp alleges false information was used to undercut its shareprice so shortsellers could profit from their positions in its stock. The allegations in the ongoing case have not been proven in court and, as of presstime (9:00 AM Pacific) newly named defendants to the suit, some of whom reportedly have offices in B.C., had not responded to requests for comment by phone or email.
Chief among the added defendants were an investment company called EOS Holdings along with its principal Jon Carnes and its research director Zane Heilig. Silvercorp also named for the first time the International Financial Research & Analysis Group (IFRA) - allegedly involved in the writing of short reports on Silvercorp - and Andrew Wong, who its says is an IFRA research analyst.
While Silvercorp did not go so far as to specify in its amended claim filed January 9, 2012, the degree to which degree EOS, Carnes and Heilig were involved in the short reports or investment activities as regards Silvercorp, it described the trio as members of Alfredlittle.com and having authorized a non-Silvercorp related press release from the website about another Chinese company, China Integrated Energy, for release by PR Newswire. In this case Silvercorp claims Heilig's mother - who it does not name in its amended complaint but describes as being 72 years old - wrote a cheque to PR Newswire to run the release for him, Eos and Carnes.
Wong, Silvercorp claims, is part of IFRA, which in turn it says has been a key author of Alfredlittle.com shortselling reports.
Ultimately, Silvercorp alleges these new defendants, along with those it previously named, Simon Moore, Alfredlittle.com, Jerry Katz, and Chinastockwatch.com: "commenced a so-called ‘short-and-distort' stock manipulation scheme to injure Silvercorp and to use false, defamatory and fraudulent statements and other means to artificially drive down the price of Silvercorp common stock in order to obtain illicit profits on short sales of Silvercorp common stock."
Pursuant to the allegations, Silvercorp is suing for defamation, unjust enrichment, trade libel and interference and deceptive acts and practices. Among other things, Silvercorp says it deserves more than $4 million in compensation, $10 million in punitive damages and any profits the shortsellers made, which it says could amount to up to $100 million. It also wants the court to order the shortsellers retract anti-Silvercorp reports and to not publish any more of what it calls "false and defamatory" reports about it.