Anonymous Blogger Must Appear in New York Court

By Karen Freifeld | May 14, 2012

A New York judge has ordered an anonymous blogger to appear in court next week over accusations that the blog wrote false reports about a Chinese company to drive down the stock.

The blogger was served with a subpoena via email to appear in state Supreme Court in New York on May 16, according to a court filing on Friday.

The blogger could not be identified or reached for comment.

Deer Consumer Products, a Chinese appliance maker listed on the NASDAQ exchange, last year sued “Alfred Little” and several unnamed contributors for defamation.

The lawsuit, which also names the investor website, claims that falsely accused Deer of engaging in fraudulent land transactions in China, driving down its stock price. The lawsuit sought to recover as much as $100 million in trading profits.

Bloggers have gained attention for accusing U.S.-listed Chinese companies of fraud while at the same time shorting their stock. The companies have hit back with lawsuits, saying the bloggers are distorting facts to make money. The U.S. Securities and Exchange Commission has taken action against several China-based companies that are listed on U.S. exchanges for violations of U.S. securities law.

The lawsuit brought by Deer Consumer Products is one of a trio of cases brought against “Alfred Little” in New York. Similar cases were filed by Silvercorp Metals Inc, a Chinese silver producer, and Sino Clean Energy, a producer of a coal-based slurry used as fuel.

According to the lawsuit brought by Deer Consumer Products, the company’s stock went from $11.03 to $7.90 during nine days in March 2011, while short interest rose by more than 500,000 shares. The company’s stock closed at $3.01 on Friday, down 7 percent on the day.

Attorney Joseph Johnson of Eaton & Van Winkle, who said he represents an individual who uses the name Alfred Little, declined to comment.

Eaton & Van Winkle has sought to have the lawsuit dismissed, saying its client is operating outside New York state and therefore outside the court’s jurisdiction.

At a hearing on Wednesday, attorney John Bostany, who represents Deer Consumer Products, told the judge that a second contributor may have ties to New York. Justice Carol Edmead then directed “Alfred Little” to provide that contributor’s email address so a subpoena could be served.

In a ruling on Thursday, the judge ordered that individual to appear to help determine whether she has jurisdiction over the case. She said the courtroom would be closed for the appearance.

Edmead also ordered “Alfred Little” to provide Deer with documents identifying the owner of

Martin Garbus, another lawyer at Eaton & Van Winkle, has said in court papers that his client’s comments have helped save U.S. investors from “frauds” perpetrated by Chinese companies.

The SEC suspended trading in PUDA Coal, one of the companies targeted by the bloggers, last year. The agency brought a lawsuit against PUDA Coal in February, accusing it of defrauding investors into believing they were investing in a Chinese coal business that was in fact an empty shell, according to an SEC press statement.

Florence Harmon, a spokeswoman for the SEC, declined to comment on whether had any influence in the PUDA Coal case.

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