Fraud investigator's report leads to $6 billion decline in stock price of US-listed Chinese company

VENICE, Calif. - Aug. 22, 2015 - PRLog -- It's no question the day of reckoning has come for global equity markets. More than 20% of stocks on the S&P are down by over 10%. But one high-flying US-listed Chinese darling has seen a dramatic decline of over the last few months--Vishop Holdings [NYSE- VIPS]. VIPS peaked at $30 on April 10, 2015 and then continued a marked descent, closing at $17.83 on Friday. Vishop missed out on the appreciation in stock price that many Chinese stocks enjoyed up until June 12, 2015 when Chinese markets peaked.

Some might say that VIPS is falling because all things China have declined, but that would miss an important part of the recent VIPS story. VIPS can point to May 12, 2015, as a catalyst for much of its recent pain. On that day, a previously unknown independent research firm called Mithra Forensic Research issued a scathing report on Seeking Alpha. The report suggested that VIPS was engaging in large scale financial manipulation of various financial accounts. Mithra's opinion, as detailed in the report, suggested that the company's shares were worthless.

While VIPS management issued a modest rebuttal shortly after the initial Mithra report but Mithra has since followed up with two updates and has plans to issue a third in the coming weeks. VIPS has been silent, except from issuing two financial reports showing dramatic improvements in its operations. Equity research analysts at some of the largest banks have remained steadfastly behind VIPS, with several re-affirming price targets of $30-$35 a share. Nonetheless, the company's market capitalization has fallen from about $16.2 billion the day before the Mithra report was issued, to $10.4 billion today. It seems investors have either placed greater credence on Mithra's research or would rather avoid the stock altogether until the red flags are resolved.

So who is the man behind VIPS' nearly $6 billion drop in market capitalization? Mithra has only recently been unmasked. The person behind the firm is Melvin Glapion, a former Managing Director of Kroll. According to Glapion, his work investigating bribery, corruption and fraud gave him insights into potential red-flags that investors might not appreciate. “Much of my prior work was helping clients either understand the risks before, or deal with the results after a fraud had happened.  I thought what if I could alert investors to fraud while it is happening, possibly limiting the potential damage.”

Since graduating from Harvard Business School, Glapion has held positions in investment banking, telecommunications, aerospace & defense and strategy consulting.  When asked about his targets, Glapion states, "I have a large and growing list of sell targets right now. Mithra Forensic Research will be very busy in the coming months.”