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Thursday, January 26, 2012

China coal firm rejects fraud claims after shares tank

Thursday, 26 Jan 2012

Reuters reported that China Winsway Coking Coal Holdings Ltd dismissed a research report alleging financial fraud at the logistics company that sent its shares plunging on Thursday.

Hong Kong listed Winsway which made its market debut in 2010 and has a market value of HKD 7.2 billion said that nothing in a 10-page report by a company called Jonestown Research alleging fraud at the firm had been substantiated and that its accountants were reputable and had carried out due diligence.

Mr Jerry Xie Winsway Chief Financial Officer said "There is nothing funny or smelly in our prospectus."

He made the remarks in response to the Jonestown Research report, which alleged that "Winsway has material misstatements in its reported numbers that amount to securities fraud."

Mr Xie said "The information in the Jonestown report was unsubstantiated and wrong. KPMG will be fully behind us. We don't know if there will be a review. We need time to decide how to respond to this officially and if an investigation is warranted."

He said that "Jonestown was using Moody report to say Winsway is a fraud. I don't know how credible that report was. He added that Winsway would arrange tours to show investors the company was not a fraud.”

Jonestown Research said in a disclaimer at the end of its report that it had built a short position on Winsway shares and had every reason to want its stock price to go down.

No contact details for Jonestown were immediately available.

China-focused private equity fund Hopu Investment Management Co in May last year sold nearly half its stake in Winsway for around USD 82 million.

(Sourced from Reuters)

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