Sino-Forest Lashes Back and Muddies the Waters at Muddy Waters Research

On June 2, 2011, Muddy Waters Research, a firm specializing in uncovering fraudulent publicly-traded Chinese companies,

comparing Sino-Forest Corp

to a Madoff-like ponzi scheme and a multi-billion dollar fraud. After this report was published, the company's shares throughout the rest of the summer were under a lot of pressure, losing most of their value in no time at all. In the months following, Sino-Forest began releasing notes on how Muddy Water's claims were false and began to show evidence refuting the false accusations. Sino-Forest hired an independent committee to verify its books and to prove Muddy Waters wrong. Investors did not care. Even with all the defense by the company, it seems as though Muddy Waters had won in its attempt to uncover another fraudulent Chinese company. However, on Tuesday, Sino-Forest revealed the findings from the independent committee. According to Sino-Forest, the independent committee verified its cash balances, timber assets, book values and revenues. Mr. Judson Martin, Vice-Chair and CEO of Sino-Forest stated "This has been an intense and challenging process and I am pleased that the Independent Committee has been able to refute the substance of the allegations made in the Muddy Waters report. "The Independent Committee report verifies the Company's stated cash balances, confirms registered title or contractual rights to the Company's stated timber assets, as well as the book value of these assets, reconciles reported total revenue and refutes the allegation that Yuda Wood is a subsidiary of the Company. We can categorically say Sino-Forest is not the 'near total fraud' and 'Ponzi scheme' as alleged by Muddy Waters," he continued. Sino-Forest Corporation is a commercial forest plantation operator in China. Its principal businesses include the ownership and management of tree plantations, the sale of standing timber and wood logs, and the complementary manufacturing of downstream engineered-wood products.