China Internet Says Investigation Finds No Wrongdoing
In today’s report, China Internet summarized the findings of the investigation and refuted eight specific allegations.
China Internet Nationwide Financial Services Inc. hit back today against recent questions regarding the veracity of its financials, saying its independent investigation found no evidence supporting the allegations.
The Beijing-based company, a financial advisory firm, had initiated the investigation after the short-selling firm, Muddy Waters Research, published a report on Dec. 20 listing several reasons why the firm believed the company had willfully misstated or misrepresented its financial condition.
"We conclude that China Internet Financial Services Inc. (Nasdaq: CIFS) is a King Zero – just another worthless China fraud," concluded Muddy Waters.
In today's report, China Internet summarized the findings of the investigation and refuted eight specific allegations.
Among other things, the company said the investigators found "no material inconsistency between the gross revenue in the Company's books and records and the revenue reported in is SEC reports." It also said that loans it made to four companies, which Muddy Waters claimed appeared to be "sham counterparties," were verified and had been repaid.
In addition, China Internet said its special committee compared the company's net profit margin, which Muddy Waters said appeared falsely inflated, with two other unnamed Chinese financial services companies and found it at a level between the two.
While presenting its own case against the allegations, China Internet did say that the company "had adopted, and the management will in the near future implement, a series of measures intended to improve the Company's operations, compliance and internal controls."
Shares in China Internet rose more than 10 percent to $31.99, up $3.03 per share.