Day: February 10, 2015

Stock manipulation: Midas Infra Trade, a dormant company which gained a stupendous 1104% in 18 months, with almost no income

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http://www.moneylife.in/article/stock-manipulation-midas-infra-trade/40355.html

Stock manipulation: Midas Infra Trade

5 February 2015

Moneylife

Midas Infra Trade gained a stupendous 1104% in 18 months, with almost no income

Midas Infra Trade Ltd (MITL) is supposedly in the business of ‘share trading’. Prior to April 2014, MITL was known as Associated Finlease Ltd. It is a dormant company. It reports marginal income from its trading activities. With almost nil net profits, in an 18-month period, the stock of MITL gained a stupendous 1104%—from Rs0.95 on 23 May 2013 to Rs11.44 on 5 November 2014. Since then, the stock price has fallen 46% to Rs6.15 on 23 January 2015. Over this period, the promoters have been reducing their stake. In just a year, they have reduced their stake to 0.35% on September 2014 from 8.85% in September 2013. This suspicious activity did not raise a red flag, despite the regulator and the Exchanges being aware of MITL’s mismanagement in the past. In 2000, MITL’s certificate of registration as a non-banking finance company was rejected by the Reserve Bank of India (RBI) and it was prohibited from accepting deposits. Yet, in 2010, MITL collected money from public through money circulation schemes by making tall promises of high returns. Though this led to a cautionary notice from RBI, no penal action was taken against the company. MITL has also been suspended in the past for not complying with the listing agreement. No wonder, investors are so suspicious of the stock market and have little respect for the regulators.

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Will RBI’s new regulations be effective for bond market? This would reduce risk of malpractices adopted by the intermediaries, which is what happened in the Harshad Mehta stock manipulation scam financed by undervalued bank receipts

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Will RBI’s new regulations be effective for bond market?

Abhirup Ghosh

9 February 2015

Moneylife

RBI’s new regulations on bond market prescribe settlement through clearing houses, allows inclusion of instruments issued by several agencies to bring more liquidity and the ‘haircut’ to help corporates to leverage more The Reserve Bank of India (RBI) on 3 February 2015 came out with a new set of regulations on the ready forward contracts on Corporate Debt Securitiesreplacing the old one of 2010. The new regulations are certainly looking better than the old one, but not sure of how effective will it be. There are three things that work for the new regulation. Firstly, unlike the earlier regulations, this one prescribes for settlement through the clearing houses of the three stock exchanges, BSE, NSE and MCX-Stock Exchange (MCX-SE).

This would reduce risk of malpractices adopted by the intermediaries, which is what happened in the Harshad Mehta scam. Continue reading →

[Flashback] Corporate Accounting Fraud: A Case Study of Satyam Computers Limited

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http://www.scirp.org/journal/PaperDownload.aspx?paperID=30220

Posted by John SOH Yong Ye, Year 4 undergrad at the School of Economics, Singapore Management University

ABSTRACT
From Enron, WorldCom and Satyam, it appears that corporate accounting fraud is a major problem that is increasing both in its frequency and severity. Research evidence has shown that growing number of frauds have undermined the integrity of financial reports, contributed to substantial economic losses, and eroded investors’ confidence regarding the usefulness and reliability of financial statements. The increasing rate of white-collar crimes demands stiff penalties, exemplary punishments, and effective enforcement of law with the right spirit. An attempt is made to examine and analyze in-depth the Satyam Computer’s “creative-accounting” scandal, which brought to limelight the importance of “ethics and corporate governance” (CG). The fraud committed by the founders of Satyam in 2009, is a testament to the fact that “the science of conduct is swayed in large by human greed, ambition, and hunger for power, money, fame and glory”. Unlike Enron, which sank due to “agency” problem, Satyam was brought to its knee due to ‘tunneling’ effect. The Satyam scandal highlights the importance of securities laws and CG in ‘emerging’ markets. Indeed, Satyam fraud “spurred the government of India to tighten the CG norms to prevent recurrence of similar frauds in future”. Thus, major financial reporting frauds need to be studied for “lessons-learned” and “strategies-to-follow” to reduce the incidents of such frauds in the future.

How to catch a fraudster – using ‘top cop’ Benford and the power of maths

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http://www.theregister.co.uk/2014/05/14/theorums_1_benford/

Posted by Ida Inu YATI, Year 3 undergrad at the School of Accountancy, Singapore Management University

Big Data’s Big 5 Yes, we’ve been hit over the head enough times with the phrase “big data” to be aware of its presence, even though we’ve been up to our armpits in streams of huge unstructured datasets for years.

Those of you who are analysts or data scientists will have already picked up a set of tools that help you find hidden information buried deep in the data. Those tools may be languages (for example R), statistical tests (t-test, Analysis of Variance) and/or data mining techniques (clustering). Continue reading →

Expected dividend and earnings management: Evidence from Taiwan

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http://eds.a.ebscohost.com.libproxy.smu.edu.sg/eds/pdfviewer/pdfviewer?sid=55bb4c98-3bd6-412a-a1b5-2dd6ef74c69e%40sessionmgr4004&vid=3&hid=4103

Posted by Joel CHUA Yong Sheng , Year 3 undergrad at the School of Business, Singapore Management University

Expected dividend and earnings management: Evidence from Taiwan

Szu-Hsien Lin, Li-Hua Lin, Huei-Hwa Lai, Chien-Chung Tu

Abstract

The earnings of a firm are not only relevant to its survival, but also affect managers’ performance and stakeholder’s decision. The accrual basis of accounting provides managers the discretion of financial statements. Since the funding of dividends often comes from and is often limited to earnings or equity increased, the accounting earnings are one of the important factors that determine the level of dividend payouts. In other words, when accounting earnings are lower than expected dividend levels, managers will have the incentive for an upward earnings management to prevent decreases in dividends. Daniel, et al. (2008) found that managers treat the expected dividend as an important earnings threshold. This paper followed Daniel, et al. (2008), and adopted the 6145 companies that listed in Taiwan Stock Exchange and OTC market, from 2005 to 2010, to examine the association between dividend threshold and earnings management. The empirical results support our hypothesis that the dividend threshold is an important incentive for managers to engage in earnings management. This is worth the attention of stakeholders and researchers.

Official Suspected of Biggest Financial Fraud in China’s History Investigated

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http://www.theepochtimes.com/n3/1243598-official-suspected-of-biggest-financial-fraud-in-chinas-history-investigated/

Posted by Eugene SAY Gui Hua, Year 4 undergrad at the School of Business, Singapore Management University

Official Suspected of Biggest Financial Fraud in China’s History Investigated

By Lu Chen, Epoch Times | February 9, 2015

Last Updated: February 10, 2015 7:59 am

CMB

The high-living nephew of a former Chinese communist leader is said to be in the crosshairs of the Party’s anti-corruption investigators, according to a number of reports in the Hong Kong press recently. Continue reading →

[Flashback] Rare Victory for U.S. Investor in Chinese Reverse Merger Company

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http://blogs.wsj.com/chinarealtime/2013/01/23/rare-victory-for-u-s-investor-in-chinese-reverse-merger-company/

Posted by Eugene SAY Gui Hua, Year 4 undergrad at the School of Business, Singapore Management University

Jan 23, 2013

Rare Victory for U.S. Investor in Chinese Reverse Merger Company

Investors have lost billions over the last couple of years from investing in U.S.-listed Chinese companies that saw their share prices fall to mere pennies after short sellers accused them of fraud or auditors said their financial disclosures couldn’t be trusted. Continue reading →

984 HK and 246 mainland clients named on HSBC list of hiding assets, including Li Xiaolin – the daughter of former Premier Li Peng; HSBC admits failings after helping criminals hide assets; The Swiss Leaks: Bill Whitaker investigates the biggest leak in Swiss banking history and examines HSBC’s business dealings with a collection of international outlaws

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http://www.thestandard.com.hk/news_detail.asp?we_cat=11&art_id=154113&sid=43863061&con_type=1&d_str=20150210&fc=2

http://www.ft.com/intl/cms/s/0/f87c9cbc-b072-11e4-92b6-00144feab7de.html#slide0

984 HK clients named on list

Imogene Wong
Tuesday, February 10, 2015
The Swiss private banking arm of HSBC Holdings (0005) had 984 Hong Kong and 246 mainland clients, including Li Xiaolin – the daughter of former Premier Li Peng. Continue reading →

Flamboyant Malaysian Jho Low’s real-estate deals in shell companies connected to Prime Minister Najib called into question

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http://www.nytimes.com/2015/02/09/nyregion/jho-low-young-malaysian-has-an-appetite-for-new-york.html

Posted by Valerie NG, Year 3 undergrad at the School of Accountancy, Singapore Management University

Flamboyant Malaysian’s real-estate deals called into question

NEW YORK — In early 2010, a young Malaysian financier named Mr Jho Low began making some very expensive real-estate deals in the United States.

FEBRUARY 10

NEW YORK — In early 2010, a young Malaysian financier named Mr Jho Low began making some very expensive real-estate deals in the United States. First, a shell company connected to Mr Low, famous back home for partying with the likes of American socialite Paris Hilton, bought a US$24 million (S$32.5 million) apartment in the Park Laurel condominiums in Manhattan. Three years later, that shell company sold the condo to another shell company, this one controlled by someone even more prominent in Malaysia: The film-producing stepson of the Prime Minister. Continue reading →