China Medical (CMED) Hit On Negative Report

China Medical Technologies Inc. (Nasdaq: CMED) is seeing heavy early pressure after Glaucus Research initiated coverage on the stock with a Strong Sell and believes the equity is worth zero.

The report noted, among other things:

• We believe that CMED has defrauded investors and that it is the next Longtop Financial (LFT) or Universal Travel Group (UTA)," the report said.
  
  
• CMED paid $28 million for an acquisition from a seller who we believe was secretly related to CMED’s chairman. Evidence also shows that CMED radically overpaid for the acquisition: a few months before selling the company to CMED, a company controlled by parties related to CMED insiders bought out minority shareholders at prices suggesting that the business was worth $5-$8 million, not the $28 million paid by CMED for the acquisition. In our opinion, CMED’s chairman orchestrated an acquisition to embezzle roughly $20-$23 million from the public company.

Read the full report here

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