Not unless there was a massive coordination from the shorts to scare away DTT, an operation planned more than 1 year ago.
In Starr's lawsuit, it says the following:
"Allegations of Fraud:
45. Upon information and belief, by mid-2010, DTT began receiving anonymous complaints alleging that CCME and Mr. Cheng were committing fraud through the corporate entity."
Let's review the historical short interest on CCME. The shorts were piling in starting mid-2010. Coincidence?
Short interest from Nasdaq:
2/28/2011 7,827,981
2/15/2011 7,572,790
1/31/2011 6,797,568
1/14/2011 6,436,107
12/31/2010 5,463,096
12/15/2010 4,810,933
11/30/2010 3,524,923
11/15/2010 3,164,687
10/29/2010 3,562,592
10/15/2010 4,391,637
9/30/2010 4,443,318
9/15/2010 3,311,233
8/31/2010 2,992,279
8/13/2010 2,467,724
7/30/2010 1,915,351
7/15/2010 1,707,333
6/30/2010 1,267,942
6/15/2010 900,878
No matter how hard the shorts try, it seemed to have backfired. The stock closed high of $22.81 in January 27 2011. They were losing money big time. So they decided to turn up the heat.
I reference again the list of "allegations" Starr included in the lawsuit:
"52. The letter included a summary of the public allegations against CCME"
Starting with Citron's attack on January 31 2011. Up until March 3 2011. Obviously the whole purpose from these allegations were to drive the price down, way down. It's funny that Starr called these "public allegations". As far as I am concerned, only Citron/MW/blog from reader10q were made public. All those "anonymous" tips to Deloitte were non-public information. So Starr knew something in advance. It's ridiculous that Dorothy just watched everything pass by and now Starr is playing the victim.
IMO, the ever climbing short interest, the allegations of Citron/MW (on CNE!) and all the subsequent "anonymous" tips were all planned ahead of time.
It will be hilarious if this lawsuit and Nasdaq's compliance requirements pushed Cheng to perform a forensic audit. Not only will the shorts lose money on interest from borrowed shares, the company comes out squeaky clean and opens at $30/share. Sure some of you will say that I am dreaming but I still believe that the shorts picked the wrong company/CEO to F with.
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