Short Sellers: "Freedom of Information Act Request Uncovers Pending or Prospective SEC Law Enforcement Proceedings Against DEER"

According to an article at alfredlittle.com, the SEC has refused a Freedom of Information Act Request "from class action lawyers to provide non-public records concerning Deer Consumer Products DEER and its management or directors, citing a seldom used exemption." The exemption, 5 U.S.C. § 552(b)(7)(A) or simply “Exemption 7(A),” prevents the disclosure of "records or information compiled for law enforcement purposes, but only to the extent that production of such law enforcement records or information . . . could reasonably be expected to interfere with enforcement proceedings.” The post goes on to explain that the SEC is refusing to hand over records on DEER and its management and directors "because specific or contemplated law enforcement proceedings against DEER are either pending or prospective." According to the website, and their reasoning appears sound, "it seems it is only a matter of time before the SEC takes action" against the company. In particular, alfredlittle.com anticipates that the SEC may be investigating violations including the "Misrepresentation or omission of important information about securities," and "Manipulating the market prices of securities." The questions involving the company involve a $21 million Land-Use Rights Cash rebate as well as promotional payments the company made to a brokerage called First Merger Capital. As a small-cap Chinese company, Deer Consumer Products (DEER) immediately falls under an umbrella of suspicion. This is particularly true now that detailed irregularities have been exposed by short sellers. Alfredlittle.com has been raising questions about DEER since last Spring. These reports along with other fraud revelations in the Chinese small-cap space such as China MediaExpress Holdings and RINO International, have caused DEER's share price to fall precipitously. In 2011, the stock is down better than 60%. On Tuesday, DEER has lost another 1.33% to $4.36.