Telestone Technologies Corp. (fka TSTC)

[kel3]

The Heat Is Coming Down On China Shorts

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http://www.citronfraud.com/



China attacks foreign short-sellers in official editorial

SHANGHAI | Thu Sep 6, 2012 1:34am EDT
(Reuters) - China said foreign short-sellers targeting Chinese companies listed
in the U.S. are engaged in a "malicious act", in an editorial published by the
official Xinhua news service on Wednesday.

The editorial, titled "U.S. firms poison reputations of China start-ups for
profit", represents the first time Beijing has taken a position on a running
public brawl between a group of Chinese technology executives and Los
Angeles-based short-seller firm Citron Research.

The commentary called for the U.S. Securities Exchange Commission (SEC) to
investigate short sellers like Citron and suggested that Chinese companies might
stop listing in the U.S. if they don't receive better treatment.

"With the U.S. economy floundering for so long, the United States cannot afford
to have a capital market that attracts little interest or participation from
Chinese companies."

On Monday, former Google China executive Kai-fu Lee and over 60 other Chinese
business leaders published an open letter accusing Citron Research of
deliberately spreading lies about listed Chinese companies, in particular Qihoo
360 Technology (QIHU.K), to profit when their share prices decline.

Citron Research denied the charges, and said that Lee has a conflict of interest
because he has a business relationship with Qihoo 360.

Short-sellers, who borrow stock to sell at a high price and buy back the stock
at a lower price if share values drop as expected, earned vast sums from
successful attacks on overseas-listed Chinese companies in recent years.

The Xinhua editorial admitted that short-sellers did find genuine problems at
some companies but said that they are now unfairly targeting quality Chinese
firms.

Another company targeted by foreign short-seller reports, China's Sky One
Medical Inc (CSKI.PK), was charged with securities fraud by the SEC on
Wednesday, and investigations into other Chinese companies prompted by
short-seller allegations remain ongoing.

Hong Kong and U.S. regulators want Chinese subsidiaries of Western auditors to
hand over documents related to audits of Chinese companies accused of financial
irregularities but so far the subsidiaries have refused, citing state secrecy
laws.

Long-running negotiations between U.S. accounting securities regulators and
their Chinese counterparts have still not reached a solution to allow American
inspections of audit firms or access to their work papers.

(Reporting by Pete Sweeney; Editing by Eric Meijer)