Cries of fraud for Chinese tech company Quihoo
04 July 2012 Bejing
Image: Shutterstock
Quihoo has joined the list of Chinese companies accused of fraud by shortsellers. The Bejing-based online security software developer has denied allegations made by Anonymous Analytics that user traffic on its website is lower than described.
“Qihoo’s directory page gets significantly less traffic than management has led the capital markets to believe,” Anonymous said. “All that massive traffic volume that was supposed to transform Qihoo into an Internet marvel doesn’t exist.”
Qihoo’s chief financial officer Alex Xu refuted the claims, saying the report was a repetition of what other short sellers have said in the past, and the company has clarified these sorts of claims before.
But in light of the allegations, American depositary receipts of the company sank to $16 in New York, the lowest price since January, in turn prompting the US SEC to put a short selling restriction in place.
Traders who want to bet on a further drop must wait after the stocks fall 10 percent from the prior day’s closing level.
Other Chinese companies accused of misstating information include, Sino-Forest, which filed for bankruptcy in March after it was accused by a short seller of misstating business and assets, and China Medical Technologies, whose trading of ADRs was suspended last week by the US SEC after questions arose about the accuracy of company information.
“Qihoo’s directory page gets significantly less traffic than management has led the capital markets to believe,” Anonymous said. “All that massive traffic volume that was supposed to transform Qihoo into an Internet marvel doesn’t exist.”
Qihoo’s chief financial officer Alex Xu refuted the claims, saying the report was a repetition of what other short sellers have said in the past, and the company has clarified these sorts of claims before.
But in light of the allegations, American depositary receipts of the company sank to $16 in New York, the lowest price since January, in turn prompting the US SEC to put a short selling restriction in place.
Traders who want to bet on a further drop must wait after the stocks fall 10 percent from the prior day’s closing level.
Other Chinese companies accused of misstating information include, Sino-Forest, which filed for bankruptcy in March after it was accused by a short seller of misstating business and assets, and China Medical Technologies, whose trading of ADRs was suspended last week by the US SEC after questions arose about the accuracy of company information.
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