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by Mike Caswell

Silvercorp Metals Inc. has received an answer to the defamation lawsuit it filed in the Supreme Court of New York against Alfred Little, Chinastockwatch.com and others. New York hedge fund manager Anthion Management LLC has identified itself as the operator of the website Chinastockwatch.com and the author of an anonymous letter to the B.C. Securities Commission that touched off Silvercorp's battle with short-sellers. Anthion denies that it defamed Silvercorp, and says its report was based many suspicious items in the company's public filings.

The identity of Anthion was a mystery in August, 2011, when it sent a 14-page letter to the B.C. Securities Commission and others claiming there was an accounting fraud at Silvercorp. According to the letter, the company had reported 2010 earnings of $66-million (U.S.) in North America, when government filings in China showed a $500,000 (U.S.) loss. The document touched off a series of news releases from Silvercorp, which denied any problems with its earnings and contended that the anonymous letter was part of a "short-and-distort" scheme. The company then sued several parties in New York, including the website Chinastockwatch.com, for defamation.

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