Focus Media denies fraud report after 39% share price fall

Focus Media Holding (FMCN.NASDAQ) denied allegations of embellishment published yesterday by short seller Muddy Waters which triggered a 39% drop in its share price, erasing US$1.36 billion of market capitalization, Bloomberg reported. Muddy Waters said yesterday in a report that Focus Media had overstated the number of screens in its ad network by 50%, and had also overstated takeovers to mask losses. The report described Focus Media as “a highly troubled enterprise that is run solely for the benefit of insiders.” Focus Media said it “denies the allegations entirely”; its share price subsequently rebounded 15%. Jason Jiang, CEO of Focus Media, added that “there’s not much of a concern for the advertisers.” He went on to say the allegations of management motives for past takeovers were “without foundation or basis.”