Ex-Longtop CFO Blamed for ‘Foundation of Lies’; An investor lawsuit accuses a CFO of ignoring signs of fraud when he signed off on financial results, but the CFO says he believed they were accurate

http://ww2.cfo.com/fraud/2014/11/ex-longtop-cfo-blamed-foundation-lies/

Ex-Longtop CFO Blamed for ‘Foundation of Lies’

An investor lawsuit accuses a CFO of ignoring signs of fraud when he signed off on financial results, but the CFO says he believed they were accurate.

Matthew Heller

November 21, 2014 | CFO.com | US

The 2010 and 2011 financial results of Longtop Financial Technologies were a “foundation of lies,” an attorney for union pensioners and investors told jurors in the trial of a securities class action against the Chinese company’s former CFO. Continue reading

Lumena New Materials, a Chinese chemicals company that has come under attack from short sellers, has said the negative research has caused it difficulties to maintain the support of its banks, creditors and suppliers

http://www.ft.com/fastft/244751

http://www.emersonanalytics.co/downloads/Lumena-HK_0067-Delisting.pdf

https://glaucusresearch.com/wp-content/uploads/downloads/2014/03/GlaucusResearch-China_Lumena-HK_0067-Strong_Sell_March_25_2014.pdf

http://www.ifrasia.com/china-pair-raise-alarm-for-lenders/21139477.article

http://www.scmp.com/print/business/china-business/article/1465116/lumena-denies-allegations-fraud

(67) Lumena: China Lumena New Materials Corp announced, based on the information provided by the Company’s senior management team in the PRC subsequent to the issuance of the reports by certain research groups against the Group in March and April 2014 as described in the announcement of the Company dated 3 April 2014, the Company has encountered difficulties in maintaining the continual support from, among others, local banks in the PRC, creditors and suppliers, which has impacted the Group’s operations. As a result, the Group can now only maintain a low level of production of its major products of thenardite and polyphenylene sulfide. The Company has been in discussions with several industrial peers and other third parties on possib le co-operation arrangements for the PPS and thernardite business operation and the Group and its creditors have been in discussions with a view to agree on a debt stabilisation programme for the Group’s outstanding borrowings, including but not limited to extension of the repayment dates and refinancing of the existing loans Continue reading

Accountants Increasingly Use Data Analysis to Catch Fraud Vs When Using Math to Catch Crooks, You Can’t Jump to Conclusions

http://online.wsj.com/articles/accountants-increasingly-use-data-analysis-to-catch-fraud-1417804886

http://blogs.wsj.com/numbers/when-using-math-to-catch-crooks-you-cant-jump-to-conclusions-1870/

Benford

Accountants Increasingly Use Data Analysis to Catch Fraud

Auditors Wield Mathematical Weapons to Detect Cheating

JO CRAVEN MCGINTY

Updated Dec. 5, 2014 6:48 p.m. ET

When a team of forensic accountants began sifting through refunds issued by a national call center, something didn’t add up: There were too many fours in the data. And it was up to the accountants to figure out why. Continue reading

India Analyst Is Jailed After Negative Report Questioning Corporate Governance and Accounting: Rare Arrest Seen Causing a Chill on Market Coverage

http://www.wsj.com/articles/india-analyst-is-jailed-after-negative-report-1418359350

India Analyst Is Jailed After Negative Report: Rare Arrest Seen Causing a Chill on Market Coverage

GEETA ANAND

Dec. 11, 2014 11:42 p.m. ET

GURGAON, India—Complaints filed by one of India’s biggest property and financial-services groups after a negative report about it more than two years ago have landed the report’s co-author, accountant Nitin Mangal, in jail.

The group, Indiabulls , says the report, which questioned its corporate governance and accounting, was full of lies and was used for extortion purposes. Mr. Mangal’s lawyer says the report was based on public information, was accurate and wasn’t used to try to scare money out of anyone. Continue reading

Revenue Recognition Changes Could Spur SEC Fraud Probes

http://ww2.cfo.com/gaap-ifrs/2014/12/revenue-recognition-changes-spur-sec-fraud-probes/

Revenue Recognition Changes Could Spur SEC Fraud Probes

The new FASB revenue recognition standard means increased focus from auditors and likely unwanted attention from the SEC.

Nicolas Morgan and Shauna Watson, Contributors

December 12, 2014 | CFO.com | US

Throughout 2014, the Securities and Exchange Commission has signaled an increased focus on financial reporting fraud in general and revenue recognition in particular. In October, SEC Chair Mary Jo White said the SEC has seen a “significant jump” of more than 20% in enforcement actions in the area, and SEC Enforcement Director Andrew Ceresney called the area the “next frontier” for enforcement. Continue reading

Meet the SEC’s Brainy New Crime Fighters: ‘Quants’ Are Agency’s Latest Weapon Against Financial Misdeeds

http://www.wsj.com/articles/meet-the-secs-brainy-new-crime-fighters-1418601581

Meet the SEC’s Brainy New Crime Fighters: ‘Quants’ Are Agency’s Latest Weapon Against Financial Misdeeds

Lori Walsh, left, chief of the Securities and Exchange Commission Enforcement Division’s Center for Risk and Quantitative Analysis, with Howard Kaplan, a data analyst in the SEC’s enforcement division, in Washington. T.J. KIRKPATRICK FOR THE WALL STREET JOURNAL

SCOTT PATTERSON

Updated Dec. 14, 2014 10:39 p.m. ET

Long outgunned by Wall Street’s legions of Ph.D.s, the Securities and Exchange Commission is arming itself with mathematicians and computer programmers of its own to catch bad market actors.

The question is whether this is an arms race government regulators can hope to win.

The SEC is mustering its mathematical firepower in its Center for Risk and Quantitative Analytics, which was created last year soon after Mary Jo White took charge of the agency to help it get better at catching Wall Street misconduct. The enforcement unit, led by 14-year SEC veteran Lori Walsh, is housed deep within the warrens of the SEC’s Washington headquarters, and staffed by about 10 employees trained in fields such as mathematical finance, economics, accounting and computer programming. Continue reading

SEC, Big 4 Firms Make Progress in China Audit Dispute; Hunt for fraud at mainland firms made harder by China’s secrecy laws

http://www.wsj.com/articles/sec-big-4-firms-make-progress-in-china-audit-dispute-1418685152

http://www.bloomberg.com/news/print/2014-12-15/sec-cites-progress-in-talks-to-resolve-china-auditing-standoff.html

http://www.scmp.com/print/business/china-business/article/1587376/hunt-fraud-mainland-firms-made-harder-chinas-secrecy-laws

SEC, Big 4 Firms Make Progress in China Audit Dispute

Both Sides Say ‘Significant Time’ Needed to Discuss Potential Settlement

MICHAEL RAPOPORT

Dec. 15, 2014 6:12 p.m. ET

U.S. regulators and the Chinese affiliates of the Big Four accounting firms have made “substantial progress” toward settling their dispute over access to the firms’ audit documents, the two sides said Monday.

But Securities and Exchange Commission enforcement officials and the Chinese affiliates of the Big Four firms—PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG—say that while their progress toward a settlement has “increased significantly,” they still need “significant time and care” to discuss the potential pact, according to an order in the SEC’s administrative proceeding against the firms. Continue reading