Financial fraud detection using vocal, linguistic and financial cues.
Throckmorton, Chandra S.1 firstname.lastname@example.org
Mayew, William J.2 email@example.com
Venkatachalam, Mohan2 firstname.lastname@example.org
Collins, Leslie M.1 email@example.com
Decision Support Systems. Jun2015, Vol. 74, p78-87. 10p.
Abstract: Corporate financial fraud has a severe negative impact on investors and the capital market in general. The current resources committed to financial fraud detection (FFD), however, are insufficient to identify all occurrences in a timely fashion. Methods for automating FFD have mainly relied on financial statistics, although some recent research has suggested that linguistic or vocal cues may also be useful indicators of deception. Tools based on financial numbers, linguistic behavior, and non-verbal vocal cues have each demonstrated the potential for detecting financial fraud. However, the performance of these tools continues to be poorer than desired, limiting their use on a stand-alone basis to help identify companies for further investigation. The hypothesis investigated in this study is that an improved tool could be developed if specific attributes from these feature categories were analyzed concurrently. Combining features across categories provided better fraud detection than was achieved by any of the feature categories alone. However, performance improvements were only observed if feature selection was used suggesting that it is important to discard non-informative features.
The potential 1MDB blowout: Why auditors cannot guarantee there was no fraud at 1MDB
25 May 2015
The backers of 1Malaysia Development Bhd (1MDB) have argued that because international accounting firms like KPMG and Deloitte have signed off all 1MDB’s accounts from FY2010 to FY2014, this meant no money has gone missing and no fraud has occurred.
This argument has been used to justify the not-so-elegant silence of the management and board of directors of 1MDB, who have refused to respond to questions posed to them about various transactions and the movements of billions of ringgit. They hide behind that argument despite the fact that 1MDB has run into serious cash-flow problems and can no longer service its debts, and so many questions have been raised about the whereabouts and nature of the so-called Available-For-Sale Investments valued at RM13.38 billion in its accounts for financial year ended March 31, 2014 (see “Why the RM13.38 bil Available-For-Sale Investments may not be worth much”). Critics of 1MDB have been asked to back off and let the auditor-general complete his work to review the audit of 1MDB.
The argument that because 1MDB’s accounts have been signed off by auditors meant that no fraud has occurred and that money is not missing is flawed. It shows that these people do not know what they are talking about. They have badly misinterpreted, deliberate or otherwise, the role of external auditors and they do not understand the meaning of an auditor’s report when the auditors sign off the financial statement of a company.
There are NO auditors in this world who will agree that their signing off an account can in any way or form be interpreted to mean that they confirm or guarantee that the accounts are completely true, accurate and do not contain any misstatements, by fraud or error. Continue reading
Stock manipulation: Amforge Industries
28 May 2015
The stock rallied by as much as 756% and, from that level, stock fell 58%. A perfect example of a pump & dump
A mforge Industries was into metal forging business and catered mainly to the automobile industry. In December 2008, the operation of its Chinchwad plant was suspended “due to recession in the automobile industry,” according to the company’s annual report. A lock-out was declared in May 2009 due to unrest among workers. With almost no business activity over the past financial year, Amforge reported negligible revenues from operations. The only income was in the form of interest income and income from trading of equity investments. However, the stock rallied by as much as 756%, to Rs4.28 on 9 July 2014 from Re 0.50 on 1 January 2014. From that level, the stock fell 58%; but; over the past 17 months, the stock is up nearly 226%; to Rs1.63 on 18 May 2015 from Rs0.50 on 1 January 2014. This is a perfect example of a pump & dump operation. The company has over 17,000 individual shareholders; yet, the regulator does not seem to be concerned.
YuuZoo’s latest disclosure opens a Pandora’s box for SGX
Saturday, May 30, 2015
The Business Times
Maybe it’s only me, but I’m not comfortable with e-payments firm YuuZoo posting a positive research report about itself as an official release on the Singapore Exchange’s (SGX’s) website, especially when YuuZoo paid for the research in the first place.
If all companies start doing what YuuZoo did, then where do we draw the line? Should companies be allowed to post broker reports as well? Since broker reports are not paid research and are purportedly independent, why not? But what if the reports – paid or independent – are negative? In the interests of consistency, should companies also feature them? Continue reading
2015年05月29日23:38 新浪财经 微博 我有话说(40人参与) 收藏本文
新浪财经讯 北京时间29日晚消息，中概股唯品会(VIPS)周五开盘即快速下挫，跌幅最重时超6%。盘前美国独立研究机构：Mithra鉴证研究公司再度发表强烈看空唯品会的报告，认为唯品会存在大量误导市场的行为，维持“强力卖出”评级和2.75美元目标价。 Continue reading
Mithra Forensic Research, mithraforensicresearch.com
Vipshop: More Indications Of Misrepresentation
Must Read | May 29, 2015 7:30 AM ET | About: Vipshop Holdings (VIPS)
VIPS has indicated on calls with investors that analysts misunderstood their sales figures for Lefeng; we have found additional information which suggests that VIPS continues to misrepresent Lefeng’s revenues.
Significant and growing losses at Lefeng and Ovation are likely driven by VIPS pushing Operating Expenses onto them.
CFO Yang failed to disclose an ongoing Directorship at Synutra; he also provides a graduation date from Nakai University in SEC filings that differs from that on HBS Alumni website.
Mithra is not associated or affiliated with J Capital or any hedge funds; we ask that analysts, VIPS and the media focus on the issues in the report and update. Continue reading
Troubled Hanergy’s Debt Web Snags State Banks to Shadow Lenders
June 2, 2015 — 11:14 AM SGT
One of the many mysteries behind the share price collapse of the solar panel maker controlled by Li Hejun is this: Which of the Chinese billionaire’s many creditors risk losing every yuan they put into his company? Continue reading