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Orient Paper's Alleged Financial Misstatements Under Investigation

Bensalem, Pennsylvania, USA, 19 August 2010 -- (BUSINESS WIRE) -- The law offices of Howard G. Smith are investigating potential claims against Orient Paper, Inc. (AMEX:ONP - News) concerning possible breaches of fiduciary duty or other violations of law by the company’s board of directors. Orient Paper, through its subsidiary, Hebei Baoding Orient Paper Milling Company Limited (HBOP), engages in the production and distribution of paper and paper products in the People’s Republic of China.

The investigation is related to allegations that since at least March 2009, the company issued a series of false and misleading statements in which it failed to disclose that the company’s revenues were substantially overstated and in which it exaggerated the extent of the company’s business operations. On 28 June 2010, an entity calling itself Muddy Waters, LLC, released a report indicating that Orient Paper had issued false financial statements and press releases, including that Orient Paper’s fiscal 2008 revenues were massively overstated.

On 16 July 2010, the company announced that its board of directors would retain Loeb & Loeb LLP to work with the company's audit committee to retain a Big Four audit firm, to conduct an independent investigation into the issues raised by Muddy Waters. On 28 July 2010, Roth Capital Partners, LLC, which had acted as underwriter and sold USD 25 million worth of company stock in a secondary offering on 31 March 2010, announced it was suspending analyst coverage of the stock pending the results of the investigation and its own due diligence.


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