China Short Syndrome: Are Other Names At Risk? Part I

Robert Weinstein submits:

"Attack when they are unprepared, make your move when they do not expect it."
- Sun Tzu, The Art of War

Chinese reverse merger stocks have been getting shot down so often lately that it appears as if they are in the video game called "Duck Hunt". Unfortunately for many investors, it's not electronic ducks taking hits, but their portfolio. The pattern seems to be fairly consistent. Relatively unknown halfway around the world, Chinese mid-capitalization stock is doing great both in stock performance and earnings performance. Short interest starts building with the stock, along with option activity, followed by allegations of fraud and misappropriation of company funds by management and/or management cooking the books. When the dust settles, shareholder value is largely destroyed. Some examples include:

Rino Intl Corp (RINO) traded between $15 and $20 a share until fraud allegations besieged the company.

RINO ended up getting halted, delisted off

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