tim kiladze

Globe and Mail Update

Published Friday, Sep. 23, 2011 9:51AM EDT

Last updated Friday, Sep. 23, 2011 10:41AM EDT

Silvercorp Metals Inc. SVM-T has filed a lawsuit in New York against parties who the company claims have been spreading false and fraudulent information about its business activities in China.

The key defendants in the suit are AlfredLittle.com and ChinaStockWatch.com, who both published reports that claim Silvercorp has overstated its revenue and misled investors about the grade of the silver it mines. ChinaStockWatch.com published an anonymous letter with these allegations, while Alfred Little has released a report and follow up posts on its website.

Since Silvercorp first disclosed that it had received an anonymous letter in which the writer said he or she would go public with allegations of nefarious activities, the company’s stock has dropped about 20 per cent. However, the markets on which Silvercorp is listed – the Toronto Stock Exchange and the New York Stock Exchange – have also fallen during this time period.

In an interview with The Globe and Mail on Thursday, Simon Moore, managing editor of AlfredLittle.com and a named defendant in the case, said his company was not scared by any threat of a lawsuit.

“We’re not concerned . We’re not worried. These are scare tactics,” Mr. Moore said, deeming any pending lawsuit “frivolous.”

“Unlike others, we do not back down. We stand by our word,” he said. “We’re not going anywhere.”