Employees and guests of Silvercorp Metals attend the opening bell at the New York Stock Exchange, Monday, March 8, 2010.Mark Lennihan/The Associated Press
Silvercorp Metals Inc. says it's teaming with another Chinese company targeted by short-sellers' allegations of wrongdoing to try to force the anonymous accusers to come forward.
Rui Feng, chief executive officer of TSX-listed Silvercorp, said Tuesday his company's lawyers are working with those at Nasdaq-listed Deer Consumer Products, which has launched legal action against research firm Alfred Little.
Alfred Little is behind one of two sets of allegations that Vancouver-based Silvercorp, a miner with operations in China, had inflated its earnings.
"Our lawyers are now working with Deer's lawyers to launch a lawsuit together to subpoena these people behind the scenes," Mr. Feng told investors at the Denver Gold Show in Colorado Springs on Tuesday.
Deer, which makes household consumer products in China, was granted a motion by the New York Supreme Court last month to serve Alfred Little with a summons and complaint.
The company filed a lawsuit against short sellers and some bloggers in March, including Alfred Little, alleging "an orchestrated scheme to manipulate and depress" its stock.
Alfred Little alleged in a report that Deer's management failed to disclose millions in rebates it received from a purchase of land use rights. Deer denies the allegations, which it says are based on fabricated information and credited to sources with false identities.
On Friday, Deer released another statement claiming Alfred Little offered to issue retractions of various articles "in exchange for Deer dropping its ongoing subpoena and discovery efforts in the Superior Court of the State of New York." Deer said it refused to compromise.
"As far as SVM [Silvercorp]joining Deer we do not comment on frivolous lawsuits," Simon Moore, managing editor of the Alfred Little website, told The Globe and Mail in an e-mail on Tuesday.
Silvercorp is also looking at launching its own legal action against its accusers. It has dismissed the allegations in Alfred Little's reports, as well as those in a second set of anonymous allegations, as "baseless and designed to be manipulative."
Mr. Feng has also vowed to fight back against the anonymous investors he says are "promoting a distorted form of discrimination" against companies operating in China, and called on regulators in the United States and Canada to improve regulations to protect companies from so-called "short and distort schemes."
Meanwhile, Alfred Little stands by its reports, which were commissioned by anonymous short sellers.