shares fell 53 cents, or 4.3%, to $11.88 before the trading halt shortly after 10 a.m. ET. The
lists a "T1" trading halt code, which indicates that trading is halted pending the company's release of material news.
, which operates a television advertising network on buses in China, has come under attack from short-sellers claiming fraud. These allegations have pushed the stock down 25% this year.
Last month, Muddy Waters Research accused China MediaExpress of "engaging in a massive "pump-and-dump" scheme in which it significantly inflates revenue and profits in order to enrich management through earn-outs and stock sales." Citron Research and Bronte Capital also released similarly bearish reports on China MediaExpress on Jan. 31 and Feb. 1, respectively.
China MediaExpress CEO Zheng Cheng defended the Chinese company against what he said was an attack by short-sellers. In a letter to shareholders last month, Cheng wrote that short-sellers "timed and coordinated their efforts" in "reckless and baseless attacks" against the company. Short-sellers make money from declines in share prices.
In direct response to the accusation that China MediaExpress is a fraud, Cheng wrote that the company "is strong and doing well," and that revenue and cash positions have been audited, although he did not provide additional confirmation.
Like several other small-cap Chinese stocks, China MediaExpress has seen its share price shredded by multiple accusations of fraud. Chinese reverse mergers, including
China Green Agriculture
China Education Alliance
have been slammed by critics over similar claims that filings made in the U.S. contain questionable or misleading financial statements.
reported that the
Securities and Exchange Commission
is focusing on stock promoters, investment bankers, auditors and law firms that have been active in recruiting
and raising capital for those companies by selling new shares.
-- Written by Robert Holmes in Boston
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