- FAB Universal (FU -4.6%) falls after Chinese fraud researcher Alfred Little issues a short report on the Chinese video content distributor, noting that "FAB's anti-piracy claims are a total and complete fraud."
- AL states that based on the firm's due diligence, FAB's Intelligent Media Kiosks are "loaded with very obviously pirated U.S. movies."
- The report also claims that FAB's kiosk manufacturers have only supplied 1.6K-1.7K kiosks to the company, or 10% of the claimed 16.8K units deployed. Additionally, AL states that FAB's director of franchisee sales stated that the company only has ~1K kiosk in Beijing, vs. the 3.9K disclosed in a company proxy statement.
- AL writes that the company faces a significant undisclosed liability due to the company's promise to kiosk franchisees of guaranteed minimum returns and buyback clauses using FU stock.