A recent report by Muddy Waters ,a small research firm , about RINO International Inc , a desulfurization and other environmental equipment provider to Chinese steel mills, is an interesting read. According to Muddy, RINO’s business is a complete sham. The report states that the company has inflated its earnings, their revenue for 2009 was only $11M or 94% lower than it reported in the US. Many of the company’s customers relationships are non existent.
The report goes on to say that the company’s management is using the company’s resources for personal use, e.g. management “borrowing” $3.2 million to purchase a luxury home in Orange County, CA the day that RINO closed its $100.0 million financing.
Muddy is not in clear waters either, they and some of their clients actually have a short position in RINO’s stock. So if the stock price goes down Muddy and some of its clients stand to have significant gains.
RINO in their defense issued a press release saying that it will be investigating Muddy Waters’ claims and reaffirmed that it will release third-quarter earnings on the 15th.
This definitely will be an interesting topic to keep an eye on. If Muddy’s claims are found to be incorrect, where does it leave Muddy’s credibility; but on the other hand if Muddy’s claim’s are correct, then watch out investors!

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