[Flashback] Short-Selling Investment Research Firms like Muddy Waters: Manipulating or Aiding the Market


Posted by Latha Do NADARAJAN , Year 3 undergrad at the School of Accountancy, Singapore Management University

Over the past couple of years, short seller Muddy Waters LLC and similar research firms have broken out from obscurity by exposing alleged fraud and false accounting in companies like Sino-Forest, Focus Media Holding, Orient Paper, China MediaExpress, and others.

After Muddy Waters’ research precipitated the demise of Sino-Forest, which filed for bankruptcy in March and delisted from the Toronto Stock Exchange in May, the firm is now taking on the Singapore-based international agricultural commodities trader Olam International. In a newly released research report, it likens Olam to Enron in that there are “material similarities in the way their businesses developed” and their “aggressive” accounting. Olam refutes Muddy Waters’ findings and is suing the California-based firm. Continue reading


[Flashback] SEC Charges China-Based Company and Others with Stock Manipulation


Posted by Latha Do NADARAJAN , Year 3 undergrad at the School of Accountancy, Singapore Management University

Washington, D.C., April 11, 2012 — The Securities and Exchange Commission today charged AutoChina International Limited and 11 investors, including a senior executive and director at the China-based firm, with conducting a market manipulation scheme to create the false appearance of a liquid and active market for AutoChina’s stock. Continue reading

[Flashback] India’s top 5 corporate scams stuck in judicial quagmire


Posted by Latha Do NADARAJAN , Year 3 undergrad at the School of Accountancy, Singapore Management University

5 years on, the Satyam Computers scam is back in the headlines with the Enforcement Directorate formally seeking prosecution of prime accused B Ramalinga Raju, his kin and 166 companies for money laundering through a web of inter-connected transactions and pledge of inflated shares. The Satyam fraud is being simultaneously investigated by several other agencies as well, including the Central Bureau of Investigation, the SFIO and the income-tax department. But in the interim, Ramalinga Raju its chief architect is roaming free, out on bail, having spent barely 2 years in jail as the investigations continue at a tardy pace. Continue reading

Will China Inc. Fall Victim to Accounting Fraud?


Posted by GOH Shuqi, Year 3 undergrad at the School of Accountancy, Singapore Management University

Written By: Aaron Ken Lee

February 19, 2015

In 2013, Xiao Gang, the chairman of the China Securities Regulatory Commission, conceded that civil, administrative, and criminal laws lack provisions that would allow securities regulation to actually function. The system, he said, lacks a judicial underpinning for sound capital markets. In the existing provisions of the law and their enforcement applications, even the most basic disclosure requirements essential to the healthy functioning of financial markets are absent. Continue reading

HK SFC action against China Metal Recycling for accounting fraud serves as test case for HK laws involving mainland China firms


SFC action against CMR serves as test case for HK laws involving mainland China firms

Monday, 23 February, 2015, 8:37pm


A victory for the regulator will set the scene for a tough battle by HK-appointed liquidators to secure China Metal Recycling’s mainland assets

The Securities and Futures Commission is set to take landmark legal action today against China Metal Recycling (Holdings) in a court case that will test laws to sanction mainland Chinese firms listed in the city. The securities regulator forced China Metal Recycling, which describes itself as the country’s biggest recycler of scrap metal, into provisional liquidation in July 2013, alleging it had found evidence of accounting fraud. The action was the first time the regulator used a special provision of the securities law, designed to protect investors, in the case of a listed firm. Today, the SFC will go before the High Court to wind up the company with the aim of recovering as much value as possible for shareholders and creditors.

“This is a critical test for the SFC,” said Michael Cheng, the Asian Corporate Governance Association’s research director for mainland China and Hong Kong. “What the SFC has to demonstrate is that regardless of where a company is incorporated, or where its assets are located, the regulator will go after it.” Continue reading

[Flashback] The simplicity of Chinese accounting scandals


Posted by CHEN Liting, Year 3 undergrad at the School of Accountancy, Singapore Management University

Written by: Naomi Rovnick

February 6, 2013

In the wake of Caterpillar’s $580 million write-down of the value of a Chinese acquisition where it claimed to have discovered major accounting irregularities, Beijing-based accounting expert Paul Gillis has helpfully detailed several methods crooked Chinese companies commonly use to cook the books. Continue reading