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Chinese silver producer Silvercorp Metals (NYSE: SVM ) is withdrawing its appeal of the dismissal of a defamation lawsuit against hedge fund operator Anthion Management, equity research blog AlfredLittle.com, and other media outlets. It said it disagreed with the judge's reasoning behind dismissing the action, but, in the interest of its shareholders, it was putting the matter behind it. Class action lawsuits against Silvercorp related to the original allegations that brought the defamation lawsuit are still ongoing.
In August 2011, an anonymous letter was sent to Canadian regulatory authorities, various media outlets, and the company's auditors, outlining what it believed was a $1.3 billion fraudulent accounting scheme being conducted by Silvercorp. It alleged the silver producer had overstated its financial statements and resource deposits, charges which caused Silvercorp's stock to drop as much as 20% the day after they were published.
Silvercorp denied the allegations, and a forensic accountant ultimately backed up the miner's assessment. Through the company's investigation, it was revealed that Anthion Management had been behind the anonymous letters and postings, and a defamation lawsuit was filed against that company, and the various outlets that published the report. But a New York State Supreme Court judge dismissed the lawsuit last August saying, "Considering the letters and postings here as a whole, the court finds they are not actionable."
Silvercorp appealed the dismissal, but withdrew the motion yesterday, deciding it was best to focus its efforts on its continuing operations.
The miner has numerous mines in China, and has paid a cash dividend since 2007.