Alibaba Group Holding Ltd.'s stock performance is displayed on a monitor on the floor of the New York Stock Exchange (NYSE) in New York. (Photo : Getty Images)
Alibaba-backed company Sinosoft Technology has denied allegations that it falsified its revenues and profits as claimed by ZhongKui Research in a report.
ZhongKui Research, a short-seller firm based in China, said in a report published Dec. 28 that Sinosoft Technology, in which Alibaba has a 13.32 percent stake, fabricated its revenue figures.
In the report, ZhongKui called Sinosoft "a serial fraudster at large," saying that the group had falsified its financial records while it was still listed in London. ZhongKui also alleged the fabrication of records continued when the group listed in Hong Kong.
The second report "has made further allegations which again are groundless and contains various misrepresentations, malicious and false allegations and obvious factual errors of the group", Sinosoft wrote in a statement.
It said that it will submit the necessary AIC filing information from 2006 to 2015 to the stock exchange.
The company stressed that ZhongKui's report is inconsistent with the relevant AIC filing information, adding that ZhongKui is not an institution registered in the Securities and Futures Commission of Hong Kong.
Sinosoft halted trading in its shares when the first report was released, per Fortune. Its shares hit a 17-month low on Dec. 29, when the second report was made public.
The company managed to bounce back when it officially denied the allegations, with shares jumping nearly 5 percent.
"ZhongKui Research is a short seller and therefore stands to realize significant gains in the event that the price of the shares decline. In view of this, shareholders and investors should exercise extreme caution in reading and using the information in the ZhongKui Report," warned Sinosoft.
Meanwhile, Sinosoft's second-largest shareholder Alibaba declined to comment on the matter. On its website, ZhongKui describes itself as "a highly experienced group of analysts intent on uncovering and exposing fraudulent companies globally."
