Vancouver-based Silvercorp Metals Inc. (TSX:SVM) filed a lawsuit yesterday in New York County Supreme Court charging Chinastockwatch.com, Jerry Katz, Alfredlittle.com, Alfred Little, Simon Moore and several John Doe defendants with spreading “false, defamatory and fraudulent” information about Silvercorp on the Internet and in letters to the media and regulators.
Silvercorp alleges the defendants did so to drive down Silvercorp's stock to make their short positions in the stock more profitable.
This lawsuit comes in the wake of various fraud allegations levelled against the company by the defendants in the past month. (See: “Silvercorp faces second anonymous fraud allegation” – BIV Business Today, September 15).
Silvercorp charges that, beginning on August 29 and continuing up to the present, defendants have made posts on the chinastockwatch.com and alfredlittle.com websites and sent anonymous letters to the British Columbia Securities Commission, the Ontario Securities Commission, Silvercorp’s auditors at Ernst & Young and financial media that allege Silvercorp overstated its financial position and resource deposits.
Silvercorp’s stock price dropped sharply - as much as 20% in a day - before partially recovering as Silvercorp released bank statements, government records and other documents to rebut the allegations.
Silvercorp is suing the defendants for defamation, unjust enrichment, trade libel and tortious interference, and deceptive acts and practices.
The company has asked the court to order the defendants to pay compensatory and punitive monetary damages, return profits from their short-selling activities and to remove false statements about Silvercorp from their websites.
Rui Feng, Silvercorp’s chairman, said “This is the first step on our journey to hold participants of this scheme, or those who otherwise defamed the company, harmed its shareholders and manipulated the capital markets accountable.”
Jennifer Harrison
Twitter: JHarrisonBIV