Silvercorp widens suit to add five defendants
By Pav Jordan and Allison Martell
TORONTO (Reuters) - Silvercorp Metals (SVM.TO: Quote) said on Monday it filed an amended lawsuit in New York adding five defendants to a claim that a series of short-seller reports had falsely accused the China-focused miner of a massive fraud to drive down the stock.
Silvercorp shares tumbled in September after the company said it had received an anonymous letter accusing it of fraud. Afterwards the financial blog Alfred Little weighed in with similar allegations of accounting irregularities.
The new defendants named on Monday are connected with Alfred Little, according to Toronto-listed Silvercorp. It is the first time the company has identified individuals it believes are involved with the website, which publishes anonymous stock market research.
Silvercorp, which has accused the defendants of attempting to make short positions in the company's stock more profitable, added EOS Holdings LLC., Jon Carnes, Zane Heilig, Andrew Wong and International Financial Research & Analysis to the list of defendants.
"The key point is we said we would be working to identify the parties behind the attack on Silvercorp, and this amended filing is evidence of the progress we've made," Laurenn Russell, the company's investor relations manager, told Reuters. "In the future, if further defendants are identified, we'll amend the complaint to name them as well."
Vancouver-based Silvercorp was one of several Sino-Canadian companies hurt last year by allegations of fraud from short sellers, investors who borrow stocks and then sell them in hope they will decline so they can buy them back at a lower price.
Silvercorp's stock has recovered since initial shortseller attacks in September, buoyed by a report from KPMG which is acting as an independent auditor. The report appeared to vindicate it from allegations it had misrepresented earnings and assets.
Silvercorp's original September 23 lawsuit accused Chinastockwatch.com, Jerry Katz, alfredlittle.com, Alfred Little, Simon Moore and several "John Doe" defendants with spreading false information about the company on the Internet and in letters.
(Editing by Frank McGurty and Rob Wilson)
© Thomson Reuters 2017 All rights reserved.