This past year has seen a focused attack to undermine the integrity of the US financial markets and a monumental lapse in the enforcement of the regulations created to protect investors. As outlined in more detail below, there are identifiable instances of clearly illegal acts that are being committed against retail and institutional investors on a regular basis. These activities enable a small group of investors to profit at the expense of the market integrity and at the detriment of the rest of the investment community, with absolutely no repercussions as a result of their actions. While such breaches of the law have been identified through lawsuits in which some of these groups are defendants, the actions by the regulatory community have, to date, been nonexistent and surprisingly silent given the clear violation of securities laws.

The actions taken by these investors are done with blatant disregard for the laws established to protect retail investors; the result is a breakdown in the ability for investors to trust the laws and regulations governing the markets.

This investor group breaches established laws by primarily focusing on the following:

- The use of material non public information to trade in securities prior to disclosing such information; and

- The utilization of research reports that contain false or misleading information to significantly impact the stock price of securities (in direct and blatant violation of Rule 10b-5 of the Securities Exchange Act of 1934[1]).

The typical venue for profiting by breaking the law is through a “research” report, whereby the individuals would cite a plethora of reasons why a particular company is fraudulent, when in fact the goal of the report is to create fear and panic in the investor community to drive the share price down, thereby allowing the author of the report to profit from such manipulation. In more instances than not, the “facts” presented in the report carried little or no truth, but such was the intent of the author: publish false, incomplete, or misleading data with the goal of creating investor panic about the company.

Both of these acts above are being committed by the same group of individuals and they have used this information repeatedly without any regard of the law, in defiance of the law. As a result of their ability to consistently profit from such market manipulation, the frequency of these published “reports” have increased dramatically over the last twelve months, which has also led to an increase in the number of parties that are participating in such illegal activities. We believe if such laws are not enforced, it will result in a continued degradation of the investing marketplace and a collapse of the market integrity, thereby making it nearly impossible for anyone to have faith or confidence in the public market system, or even the United States’ regulatory system.

Additionally, in a misguided effort to convince the investing public that they are within compliance of the laws (while, at the same time, employing methods that go in direct contention with the law), these same individuals have attempted to continually increase the complexity of the wording found within their disclaimers. In reality though, these individuals are knowingly breaking the law and are either creating false information to cause the stock to decline or are trading on material non public information that is materially different than the information available at the Securities and Exchange Commission (and by shorting the stock, thereby selling shares to parties that do not possess this same information and would have otherwise not entered into this transaction).

How these individuals conduct their activities is outlined below[2]:

How does the scheme played by these “hit piece research” providers work?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

We have laid it out below, but effectively by distributing "market moving" information pieces with the intent to move the market hedge funds and sophisticated traders are able to profit at the expense of the retail and smaller investors.

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Timeline:

1. Hit piece authors and their cronies put together a “hit piece” “research” piece based on due diligence they claim they have done referencing public, non public, unconfirmed and unproven damning information about a company.

2. Hit piece authors and cronies distribute such information to their friends, subscribers, partners, etc.

3. They all trade in the security based on the direction the report is intended to move the stock price of such securities. To build a position to benefit from the market moving report they intend to release they:

a. Short sell securities to other investors that are then positioned to be harmed from the information they plant o release.

b. They sell call options to collect premiums to investors that are then positioned to be harmed from the information they plan to release.

c. They acquire put options from investors that are then positioned to be harmed from the information they plant o release.

4. They wait a few days to fully load up on such positions they are seeking to profit from.

5. They release the “market moving” information to the market – including public, non public, unsubstantiated and unproven malicious and damning information for the sole purpose of manipulating the share price in violation of SEC Rule 10b-5, which causes the security plummet in value.

6. They then either:

a. Cover their short position shortly after report is out locking in hefty profits.

b. They let the call options expire that they sold collecting healthy premiums.

c. They exercise the puts and lock in healthy gains or sell the puts at a hefty premium to what they paid profiting healthily.

7. Then they go long the security as when the company responds with the facts the security is almost likely to recover around 70% of its value in the market – profiting again from the average shareholder.

8. After stealing money from shareholders as a result of their “market moving” information they disperse the market they move on to the next security.

Below are specific events that have transpired over course of the last 18 months, which have resulted in effectively no investigation or regulation action by the authorities.

- Muddy Waters Research (led by Carson Block)

o Muddy Waters would be considered the king pin of the entire Chinese stock manipulation scheme. He has attempted to manipulate the stock of multiple companies that have refuted claims and proven Muddy Waters claims false by spending millions of dollars including Orient Paper (ONP) and Sino Forest (TRE.TO). It has also been brought to our attention that Muddy Waters will knowingly pay people in China to create false data that portrays fraud on behalf of the companies.

o With regards to Rino International (RINO) and China Media Express (CCME), Muddy Waters traded on information that they possessed that turned out to be accurate information that proved that these companies were lying in their SEC filings. As a result of the information they possessed, that differed materially from the information that is publicly available at the Securities Exchange Commission, Muddy Waters and their friends traded in the security and sold shares they did not own to unknowing parties, which otherwise would not have bought the stock if they knew the material non public information that Muddy Waters possessed. Post trading substantially in the securities of the company they drafted a scathing report to cause the stock price to decline dramatically as a result of the disclosure of the material non public information enabling them to profit handsomely at the expense of the shareholders they sold shares to that was unaware of the information that Muddy Waters possessed.

- Citron Research (Andrew Left)

o Andrew Left, who has violated securities laws in the past, is a frequent violator of the law that is able to continually attack companies and trade on material information without any qualms of the law. Andrew left made numerous false allegations against a company named Harbin Electric, for the purpose of enabling him to profit from a short position and put contracts that he entered into when the stock declined from such statements. This company ended up going private and Andrew Lefts actions cost many investors short and long to lose a substantial amount of money as a result of his false claims and attempted manipulation.

o Andrew left on another such incident had specific material non public information about a company named Longtop Financial which he knew if disclosed to the general market would cause a dramatic decline in the stock price. He used such information to trade in securities and enter into put contracts of the securities with parties that did not possess the same material information that he possessed, otherwise they would most likely have not entered into such transactions. Shortly after entering into such transactions Citron wrote a scathing report listing in detail the material non public information that they exclusively possessed, that differed greatly to the information that was generally available to the investing public at the Securities Exchange Commission, and broadly disseminated the report over the internet to cause a significant decline in the stock price, enabling them to lock in substantial profits as a result of their trading in the security prior to disclosing the material non public information.

- Geoinvesting (led by Majed (“Maj”) Soueidan)

o Geoinvesting obtained material non-public information that it came in possession of which differed greatly from the SEC reports and subsequently traded in the securities of PUDA Coal, Inc. prior to disclosing such material non public information to the regulatory authorities or public. As a result of having such material non public information they were able to short the stock of the securities and buy put contracts in the securities prior to the dissemination of the report to ensure they were able to maximize their profit. Their actions included selling stock and buying put contracts off individuals and firms that did not possess such material non-public information themselves, and if the counterparty knew the material non-public information, they would not have entered into such transaction.

o Furthermore in order to maximize the decline of the stock price, Geoinvesting used multiple parties to dissemination the report including “Alfred Little” who has been sued by multiple companies for share price manipulation, and who operates under an alias.

o The following website outlines a number of “statements” from geoinvesting or their colleagues that shows their motivation http://hitpieceresearch.com/index.htm

- Glaucus Research (Matthew Wiechert)

o Following on the coattails of other stock manipulators listed here Glaucus has, on multiple occasions, made false and inaccurate claims against companies with the intent of manipulating the stock price through fear, which have been subsequently proven false by independent parties, auditors, lawyers and companies themselves. These false claims have caused significant damage to the reputation of the companies as well cause such a dramatic decrease on the stock prices of the companies that class action lawyers have stepped into to sue the companies as a result of the stock price decline, using purely Glaucus’s false report as evidence.

o As common with many of these manipulators, Glaucus never has any intent to contact management to ask questions or get clarification before releasing a factually inaccurate report; the sole reason for releasing such a report is to cause confusion and panic to drive the stock price down, thereby allowing the author to profit from the rapid drop in share price.

- Absaroka Research (led by Kevin Barnes)

o Absaroka has also been an active participant in the manipulation of data, securities and trading on what they claim to be material non public information that differs greatly from the information that is available to investors at the Securities and Exchange Commission. They are currently being sued by Skypeople Fruit Juice (SPU) for manipulating data and using a “research” report to drive down the stock price to generate a profit from a short position they held at the expense of the shareholders. This same group of individuals also attacked other companies such as Lihua International (LIWA). The timing of this individuals reports are very telling that their sole goal is to generate, or protect, their profits they generated from creating an inorganic market in the company’s securities.

- Alfred Little (Anonymous)

o Operating under and Alias Alfred Little participated on numerous attacks on publicly listed companies. These attacks ranged from manipulating data and reporting false information in various articles and research reports available on both Seeking Alpha and their website www.alfredlittle.com. This same individual is being sued by a number of companies for their actions. In a failed attempt to convince the public that they are acting with the boundries of the law, Alfred Little has recently tried to make the claim that they are purely a disseminator of information versus the author, despite the long history of authoring articles and standing behind their authorship. Many times Alfred Little has made representation on Seeking Alpha that they are1) short the securities themselves, 2) is the research firm that wrote the report, and 3) is the firm that conducted the research and possessed the information.

o On numerous occasions they have worked directly with Geoinvesting to dissemination information or gather information to enable their groups to profit at the expense of shareholders that did not possess the material non public information that they possessed.

o The following website outlines a number of “statements” from Alfred Little or their colleagues that shows their motivation http://hitpieceresearch.com/index.htm

- Kerrisdale Capital Management (led by Sahm Adrangi)

o Kerrisdale Capital has not only a repeat offender but appears to not only be violating the laws mentioned above, but others have pointed out that they may be violating a number of other laws including soliciting investors publicly over the internet as a result of their profiting from illegal market manipulation and insider trading.

o Kerrisdale has most recently attacked a company called Chinacast Education Corp (CAST). The timing of this report coincides with a recent run-up in share price of CAST: it has been suggested by many that the timing and use of manipulative information was to protect not only their short position, but also their fund’s monthly performance, which they use to actively market and attract more investors to their fund.

o They have performed the same type of claims against companies named Lihua International (LIWA) and Gulf Resources (GURE). They make the clear as day statement that they have information they claim to be factual that the companies information they possess differs greatly from the Securities and Exchange information. They also state that they have shorted the stock (sold shares to parties that did not possess the material non public information that they possessed otherwise would not have bought the securities most likely). So 1) they either are making false allegations against the company to profit from the decline in the stock price that the information causes or 2) they are trading on material non public information and using it to profit by making a directional trade based on such information to unknowing parties.

We hope that the Securities and Exchange Commission, media and regulatory agencies take these actions seriously as they are clearly causing irreparable harm to retail and institutional investors, and damaging the integrity of the U.S. financial markets. These individuals are acting on a daily basis to conduct such heinous activities to profit at the expense of retail and institutional investors alike. They believe that given the fact the Securities and Exchange Commission and regulatory agencies has turned a blind eye to such activities that they can continue to get away with the actions that they are performing.

We bring your attention to the individuals above, yet their actions have caused many more individuals in the market to copycat their model, as trading on material non public information and manipulating markets is a highly profitable venture, and so long as the authorities do not do anything to uphold and enforce the law there is very little repercussions for such activities.

We believe it is imperative that the Securities and Exchange Commission requests trading records and communication from these firms as they are clearly colluding with each others to manipulate the trading patterns of the stock, front running this information and manipulating the price pre and post the dissemination of such information to ensure that they can maximize the profit of their trades and ensure they can “control” the stock price of the security they are looking to profit from based on their inorganic actions they create in the marketplace against the companies and against ordinary investors.