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Fake Press Release in Sino-Forest Battle

To show how nasty the emotions around these battleground stocks can get: Today a press release allegedly from the SEC said that Sino-Forest critic Muddy Waters Research and its founder, Carson Block, had been charged with stock manipulation.

The press release was posted on a website called Briefingwire.com, which posts press releases for free.

As it turns out—and as CNBC was first to report—the release was a hoax. While the release appeared real, a telltale sign that it’s fake was a “litigation release” number that was out of order with current releases.

The SEC then told us it has “issued no such litigation release.”

And Block told me, “This is a complete hoax” — and said that a lawsuit is likely to follow.

Briefingwire has not responded to my inquiry.

Sino-Forest , meanwhile, continues to trade down sharply from its highs in the wake of news Monday that its largest investor, John Paulson of Paulson & Co., on Friday sold all of his 34.7 million-share stake. Also, Fitch cut its rating on Sino-Forest to BB- from BB+.

Sino-Forest remains listed—and continues to trade—on the Toronto Stock Exchange. A TSE spokesman says the exchange doesn’t comment on individual companies, but sent us a copy of the exchange’s listing standards, which appear to show that, despite Sino-Forest’s swoon, it continues to meet standards. The stock also trades on the Bulletin Board in the U.S., which only halts trading if trading is halted by FINRA prior to a delisting.

Questions? Comments? Write to HerbOnTheStreet@cnbc.com

Follow Herb on Twitter: @herbgreenberg

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