The committee has retained independent professional advisors to assist in the investigation, including an international law firm and a well-regarded forensic accounting firm, Nio said.

(Image credit: CnEVPost)

Following an initial response to allegations made by a short seller, Nio (NYSE: NIO, HKG: 9866, SGX: Nio) today announced the formation of an independent committee to formally launch an investigation into the allegations.

After reviewing the allegations, the company's board of directors, at the recommendation of the company's management, decided to establish an independent committee in order to protect the interests of all shareholders, Nio said in a statement today.

The committee, comprised of independent directors Mr. Denny Ting Bun Lee, Mr. Hai Wu and Ms. Yu Long, is responsible for overseeing the independent investigation into the allegations contained in the short seller's report, according to the statement.

The independent committee has retained independent professional advisors to assist in the independent investigation, including an international law firm and a well-regarded forensic accounting firm, Nio said.

Nio will provide updates on the investigation in due course consistent with the requirements of applicable rules and regulations of the Securities and Exchange Commission, the New York Stock Exchange, The Stock Exchange of Hong Kong Limited and the Singapore Exchange Securities Trading Limited, it said.

The company reiterates its continued and unwavering commitment to maintaining high standards of corporate governance and internal control, as well as transparent and timely disclosure in compliance with applicable rules and regulations.

A short seller called Grizzly Research said in a report released June 28 that they believe Nio is playing a Valeant-like accounting game to inflate revenue and increase net income margins to meet its goals.

They suspect that Nio likely used an unconsolidated related party, Wuhan Weineng (or Mirattery), to inflate revenue and profitability, saying it was reminiscent of the Philidor-Valeant relationship.

Nio subsequently told CnEVPost that the report was full of inaccuracies and misinterpretations of Nio's disclosures, and that it had initiated proceedings against the report.

Notably, US investors seem unfazed by the accusations of short-selling, and Nio's US-traded stock price has not been significantly affected by the short-selling.

Wall Street analysts also maintain an optimistic view of Nio, with Morgan Stanley analyst Tim Hsiao's team even offering a "tactical idea" that the company's stock price will rise in a research note sent to investors on June 29.

In addition to questioning Nio's relationship with Mirattery, Grizzly Research also cited a Chinese blog post that mentioned Nio's "gambling agreement" with Hefei, a city that saved the EV maker with a critical investment during its hardest times in early 2020.

Just this past weekend, Nio founder, Chairman and CEO William Li denied the so-called "gambling agreement," as CnEVPost reported earlier today.

Nio bought back a portion of its shares from strategic investors in Anhui in 2020 and 2021, respectively, and there is no such thing as failed "gambling" in the future, said Li.

Wall Street analysts reaffirm positive views on NIO, refute short-selling allegations