After a hiatus that led many to suspect that Mark Cuban's ShareSleuth experiment had gone the way of the hula hoop, Chris Carey is back with a scathing report on China Fire & Security Group Inc. (NASDAQ: CFSG), which bills itself as a "leading total solution provider of industrial fire protection systems in China."
The ShareSleuth report found evidence of the usual suspects in pump and dumps: exaggerated resumes, disclosure issues, associations with characters of ill repute and a lot of hype combined with little evidence of a strong operating business.
Another major red flag: CEO Brian Lin told Mr. Carey in an email "that you should be careful since you don't know how strong our business is and how many big deals we are close to completion. CFSG SHORT SELLERS WILL BE SQUEEZED - SOON!!"
An email from a CEO to a journalist of that nature is highly irregular, securities lawyer Howard Sirota of Sirota & Sirota told me in a phone conversation. He added that it is a violation of Regulation Fair Disclosure, an SEC regulation requiring that material information be disseminated simultaneously to market participants: "It goes back to the concept of full and fair disclosure. That statement wasn't made in a public dissemination to the entire market. This is selective disclosure, an effort to effect the price of the stock by giving information to a selected market participant. The idea of full and fair disclosure is a level playing field. This is like whispering to one analyst 'We're gonna beat expectations."
Be sure to check out this story from ShareSleuth -- the site could develop into a tremendous resource for investors.
Last updated: February 13, 2012: 04:08 AM
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Reader Comments (Page 1 of 1)
3-21-2008 @ 11:02AM
Steve said...
Sharesleuth is potentially a great site but they don't seem to do much work. Their last story was on Jan 14/08 and it was an update on a previous story. Before that was a story on June 19/07 which was also an update. Is this a part-time job for someone? The CFSG story is very in-depth and that sort of investigation is needed but there is no doubt plenty of questionable company situations out there that deserve exposure more than once in a blue moon.
3-21-2008 @ 5:51PM
Ken said...
Uhm, they have one to two people working full-time. You expect daily stories of that kind of depth? Even monthly? C'mon. Be serious.
3-22-2008 @ 1:29PM
Steve said...
Ken, so having one new story in June 07 and the next one in March 08 is OK with you? If he wants to be a legitimate web site with some usefulness, the billionaire Mark Cuban needs to hire more people! There are enough 'crooked' stories out there to be discovered - I don't think one article a month should be asking too much to keep readership interested. Otherwise, what's the point?