Month: March 2015

[Flashback] Cash-Poor Companies Feed Investor Hunger for ‘Happy Meals’

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http://www.wsj.com/articles/SB10001424127887323829104578622011650335422

Posted by Nureen CHAN Wan Wei , Year 4 undergrad at the School of Accountancy, Singapore Management University

When Energy Conversion Devices Inc. needed cash, the struggling solar-panel maker turned itself into what Wall Street likes to call a “Happy Meal.”

To make $316 million in bonds more appetizing, the company agreed to lend millions of its shares to hedge funds buying the bonds so they could simultaneously sell the stock in a bet against Energy Conversion’s success.

A subsequent crisis in the solar-power industry hit Energy Conversion hard. The bonds, issued in 2008, plunged in value, and last year the company filed for bankruptcy protection, wiping out shareholders. But the negative wagers paid off for the hedge funds. A Wall Street Journal examination showed that hedge funds that bought the bonds were positioned to earn upward of 20% on their investments. Continue reading →

Noble’s Iceberg Rebuttal Gets Few Prizes for Transparency

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http://www.wsj.com/articles/noble-gets-few-prizes-for-transparency-1425643834

Noble’s Iceberg Rebuttal Gets Few Prizes for Transparency

ABHEEK BHATTACHARYA

March 6, 2015 7:10 a.m. ET

One of Asia’s largest commodities-trading houses is trying to convince investors that its accounting is transparent. The whole exchange offers a reminder, though, that the very business of trading commodities is opaque. Singapore-listed Noble Group late Thursday issued a rebuttal of claims by Iceberg Research, a little-known entity that has published two reports since mid-February questioning Noble’s accounting. It is impressive that Noble responded just a week after Iceberg’s second report, perhaps one reason its shares rose 5% Friday.

Yet the stock still is down some 12% since Iceberg’s first report came out. Speed aside, Noble’s response left some questions unanswered.

Iceberg’s first allegation was that Noble carried the stake it held in Australia-listed coal miner Yancoal at $678 million on its books at the end of 2013, when the market value was a fraction of that. Noble partly addressed this issue by writing down the asset to $322 million last week. That write-down seems too little, though, considering the market value currently stands at only $8 million. Noble classifies the miner as an “associate” despite holding a stake of just 13%, and values it through its own projections of what Yancoal’s cash flows will be. Noble suggests the market price of Yancoal matters less, since it is a thinly traded stock. Even so, at least investors can plainly see that price in contrast to Noble’s in-house projections. Continue reading →

Iceberg’s Comments on Noble Group’s FY2014 Results and Noble’s Rebuttals

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Comments on FY2014 results and Noble’s rebuttals

http://www.wsj.com/articles/research-group-responds-to-nobles-rebuttal-1425607510

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

Continue reading →

Bait and Switch: How Do Chinese Firms Use Proceeds from Seasoned Equity Offerings; The bait and switch tactic may be used by the controlling shareholders for the purpose of tunneling of assets away from their listed firms at the expenses of minority shareholders via related party party transactions

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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2562274&download=yes

Bait and Switch: How Do Chinese Firms Use Proceeds from Seasoned Equity Offerings

Hong Bo University of London – School of Oriental and African Studies (SOAS)

Zhongnan Huang University of London – School of Oriental and African Studies (SOAS)

Elmer Sterken University of Groningen – Faculty of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)
January 31, 2015
CESifo Working Paper Series No. 5198

Abstract: 
We reveal motivations of Chinese firms for issuing Seasoned Equity Offerings (SEO) by examining why firms change the use of SEO proceeds and how they use unspecified SEO proceeds. Using 533 SEOs issued by Chinese firms during 1999-2006, we find that firms do not use unspecified SEO proceeds on capital investment regardless of the nature of controlling shareholders. We find that if the controlling shareholder is the state, then the firm uses unspecified proceeds to stockpile cash; if the controlling shareholder is a parent state-owned enterprise, then the firm uses unspecified proceeds on retiring debt and on related party transactions.

Related Parties, Then and Now; Related parties, as well as the relationships and transactions that a company has with them, have historically been associated with material misstatements, particularly those resulting from fraud

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Watchdog’s Hunt Is Short on ‘Wolves’; Finra program hasn’t barred any brokers tied to Stratton Oakmont from ‘Wolf of Wall Street’ fame

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http://www.wsj.com/articles/watchdogs-hunt-is-short-on-wolves-1425511252

Watchdog’s Hunt Is Short on ‘Wolves’

Finra program hasn’t barred any brokers tied to Stratton Oakmont from ‘Wolf of Wall Street’ fame

JEAN EAGLESHAM And ROB BARRY

March 4, 2015 6:20 p.m. ET

Christopher Veale started his career as a stockbroker at the notorious boiler room Stratton Oakmont Inc. depicted in the film “The Wolf of Wall Street.” In the 20 years since then, he has worked for 18 firms and racked up 25 red flags on his disciplinary record. Continue reading →

Until this week, there had been absolute silence in Sri Lanka’s Colombo stock market over the dismal happenings in the past where alleged mafia-like traders controlled the market and also certain officials at the Securities and Exchange Commission (SEC)

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http://www.sundaytimes.lk/150301/business-times/sec-catch-the-manipulators-137362.html

SEC: Catch the manipulators

1 March 2015

Sunday Times

Until this week, there had been absolute silence in the Colombo stock market over the dismal happenings in the past where alleged mafia-like traders controlled the market and also certain officials at the Securities and Exchange Commission (SEC). Continue reading →

[Flashback] Heist of the Century – How Jho Low Used PetroSaudi As “A Front” To Siphon Billions Out Of 1MDB

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http://www.sarawakreport.org/2015/02/heist-of-the-century-how-jho-low-used-petrosaudi-as-a-front-to-siphon-billions-out-of-1mdb-world-exclusive/

Posted by Ronald SIM Hong Sheng, Year 4 undergrad at the School of Business, Singapore Management University

Together with London’s Sunday Times newspaper, Sarawak Report has completed an in-depth investigation into the trail of the missing billions at the heart of Malaysia’s 1MDB (One Malaysia Development Berhad) financial scandal.

We have obtained access to thousands of documents and emails relating to transactions by 1MDB, including its initial joint venture with the little known oil company PetroSaudi International from 2009. Continue reading →

Changjiang Fertilizer chairman’s leave of absence and where the all-important legal seals were held prompt queries; Firm ‘unable to take a view’ whether chairman’s ‘personal matters’ will affect his character and integrity as a director

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http://www.businesstimes.com.sg/companies-markets/changjiang-fertilizer-chairmans-leave-of-absence-prompts-queries

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

Changjiang Fertilizer chairman’s leave of absence prompts queries

Jamie Lee

5 March 2015

Business Times Singapore

Firm ‘unable to take a view’ whether chairman’s ‘personal matters’ will affect his character and integrity as a director

CHANGJIANG Fertilizer Holdings – which shut down production for all of last year – on Wednesday announced that it has been queried by the Singapore Exchange (SGX) over the leave of absence taken by its executive chairman, Cai Jian Hua. The concerns, as put forth in the regulatory announcement, related to the details behind the “personal matters” that led to his six-month leave, and where the all-important legal seals were held. Continue reading →

[Flashback] Chinese Rogue Executives Dodge Singapore Law by Staying Home

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http://www.bloomberg.com/news/articles/2011-07-07/-rogue-executives-from-chinese-firms-dodge-singapore-laws-by-staying-home

Posted by Amy CHAN Wen Yi, Year 4 undergrad at the School of Accountancy, Singapore Management University

Singapore investors are demanding tougher rules to prosecute executives of China-based companies traded in the city-state after scandals from New York to Hong Kong have wiped out the market value of such firms.

U.S. and Hong Kong regulators have been ramping up Chinese company probes as Muddy Waters LLC said last month that Sino-Forest Corp. overstated its timber holdings, erasing as much as 82 percent of the China-based tree plantation owner’s market capitalization in Toronto. Continue reading →