BOSTON (TheStreet) -- China MediaExpress (CCME) became the latest Chinese reverse merger to get slammed by fraud accusations, with shares plunging more than 30% Thursday on a short- seller's research report.China MediaExpress shares fell as low as $10.31 Thursday after Muddy Waters Research initiated coverage on the company with a "strong sell" rating and estimated value of $5.28, a 68% discount to Wednesday's closing price. Muddy Waters accuses China MediaExpress of "engaging in a massive 'pump and dump' scheme whereby it significantly inflates revenue and profits in order to enrich management through earn-outs and stock sales."
On the other hand, Rino International ( RINO.PK) shares tanked after Muddy Waters questioned the veracity of the amount of contracts the China-based company had. Rino's management eventually acknowledged that two customer contracts questioned by the shorts had not in fact been signed. Rino also said there might be problems with 20% to 40% of its other customer contracts. Earlier this week, Citron Research released a similarly bearish report on China MediaExpress, citing discrepancies in documents filed to China regulators and credit rating agencies as well as financial analysis. The firm argues that China MediaExpress does not exist at the scale it is reporting to the investing public. "We are not saying that they do not operate any buses," Citron Research wrote, "but if you believe that the company operations are truly reflected, or even close to their stated financial disclosures, than you must go to Taco Bell for some filet mignon." After Citron's negative report was released, China MediaExpress issued a press release saying it "strongly disagrees with the views expressed" and that investors should continue to rely on filings the company has made with the Securities and Exchange Commission. "CME confirms that they were never approached by Citron Research with respect to the company, its growth, the advertising business in China or industry conditions generally and accordingly cannot comment on the reliability of their information or the thoroughness of their analytics," China MediaExpress said in a statement on Feb. 1. -- Written by Robert Holmes in Boston. >To contact the writer of this article, click here: Robert Holmes. >To follow Robert Holmes on Twitter, go to http://twitter.com/RobTheStreet. >To submit a news tip, send an email to: firstname.lastname@example.org.