Month: June 2015

IOOF’s boiler room throws customers to the wolves

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http://www.theage.com.au/business/banking-and-finance/ioofs-boiler-room-throws-customers-to-the-wolves-20150619-ghrdl6

IOOF’s boiler room throws customers to the wolves

June 20, 2015 – 12:15AM

Adele Ferguson and Sarah Danckert

Insider trading, cheating and front-running – the allegations run thick and fast in the IOOF boiler room.

As Christmas parties spilled onto the side streets of Sydney’s CBD, two men from listed financial services group IOOF were not in the mood to party. One of the men, a senior equities analyst, was about to become a company whistleblower, a move that would expose another financial scandal and cost him his job.  It was Friday December 12, 2014 and the other man, the company’s head of investigations Rob Urwin, wanted to discuss a few matters before heading home. The conversation turned to some questionable behaviour inside the company, most notably its research division and some of the antics of its head of advice research Peter Hilton, so Urwin suggested the discussion continue over a beer. As they settled in at the Shirt Bar, discreetly tucked away in an alley close to the company’s Kent Street offices, topics moved from IOOF’s aggressive sales culture to some possible serious breaches in the research division, which is the engine room of IOOF’s $150 billion funds under management.

“I was pissed off yesterday,” the equities analyst told Urwin, explaining how the company’s equities team wanted to start ramping financial advisers into stock ahead of a research report being issued.  Continue reading →

Tech Companies Fly High on Fantasy Accounting

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http://www.nytimes.com/2015/06/21/business/high-tech-fantasy-accounting.html?ref=business

Tech Companies Fly High on Fantasy Accounting

JUNE 18, 2015

By GRETCHEN MORGENSON

Technology shares have been powering the stock market recently, outperforming the broader stock indexes by wide margins. The tech-heavy Nasdaq 100, for example, is up 19 percent over the last 12 months, almost twice as much as the Standard & Poor’s 500-stock index, which has risen 10 percent. Investor enthusiasm for all things tech is understandable, given the disruptions the industry is bringing to so many businesses and the potential profits associated with that upheaval.

But there’s a more troubling aspect of the current exuberance for technology stocks: the degree to which so many of the popular companies with premium-priced shares promote financial results and measures that exclude their actual costs of doing business. These companies, in effect, highlight performance that is based more on fantasy than on reality. Continue reading →

Sebi bans Karvy Stock Broking for a year in IPO scam

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Sebi bans Karvy Stock Broking for a year in IPO scam

16 June 2015

Deccan Chronicle

Mumbai: Hyderabad-based Karvy Stock Broking Ltd (KSBL) has been barred by the Securities and Exchange Board of India (Sebi) from taking up any new primary market assignments for a period of one year for alleged irregularities committed in 21 initial public offers (IPOs) between 2003 and 2005. The matter relates to a case in which few market participants reportedly used close to 60,000 fictitious demat accounts to corner share allotments meant for retail investors.The scam was unearthed after stock markets complained to Sebi in October 2005 about large scale off-market transactions immediately following the date of allotment and prior to the listing on the stock exchanges. Following this, Sebi ordered NSDL and CDSL to examine all 105 IPOs listed between 2003 and 2005. Continue reading →

Stapled secondary deals are coming under heightened scrutiny from the SEC, which is looking closely at whether private-equity firms are misleading or shortchanging sellers in these complex transactions; “The other thing we’re looking at is offering fraud.”

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SEC Looks Closer at Stapled Secondaries — Market Talk

18 June 2015

Dow Jones Institutional News

11:52 EDT – Stapled secondary deals are coming under heightened scrutiny from the SEC, which is looking closely at whether private-equity firms are misleading or shortchanging sellers in these complex transactions. In them, investors in a P-E firm’s existing funds get the option to sell their portfolio stakes to new buyers who pledge additional fresh capital to the firm’s latest fund. “We’re looking to see how fiduciary duty is executed in that context,” Igor Rozenblit, co-head of the private-funds unit at the SEC’s Office of Compliance Inspections and Examination, said at the SuperReturn US 2015 conference. “The other thing we’re looking at is offering fraud.” (dawn.lim@wsj.com)

Bank of Jinzhou Delays Hong Kong IPO as Hanergy Link Queried

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http://www.bloomberg.com/news/articles/2015-06-19/bank-of-jinzhou-delays-hong-kong-ipo-as-hanergy-link-queried

Bank of Jinzhou Delays Hong Kong IPO as Hanergy Link Queried

June 19, 2015 — 11:42 AM SGTUpdated on June 19, 2015 — 12:53 PM SGT

Bank of Jinzhou Co. delayed its $600 million Hong Kong initial public offering as the stock exchange asked for information on the lender’s ties to a company that’s under investigation by regulators. The bourse last week requested more information on items including some litigation proceedings and on the Chinese bank’s links to Hanergy Thin Film Power Group Ltd., board secretary Wang Jing said by telephone on Friday. The exchange’s initial feedback was positive after the bank addressed the queries, he said, without elaborating. The lender has sold wealth-management products that invested in Hanergy’s debt, according to documents seen by Bloomberg. Hong Kong’s Securities & Futures Commission said May 28 it was investigating Hanergy, whose shares have been suspended since a 47 percent tumble on May 20. Continue reading →

Hanergy investigation could last years as SFC pores over trades

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http://www.bloomberg.com/news/articles/2015-06-18/hanergy-investigation-could-last-years-as-sfc-pores-over-trades

What You Need to Know About the Company That Lost Nearly $19 Billion in 24 Minutes

by Frederik Balfour

June 19, 2015 — 12:01 AM SGT

It’s been nearly one month since Hanergy Thin Film Power Group Ltd.’s shares were suspended May 20, and there is no indication when they might resume. Much depends on the Hong Kong Securities & Futures Commission, which issued a rare statement about an ongoing investigation into the company’s affairs on May 28. Since then the company, which makes equipment used to manufacture solar panels, has not issued any statements concerning the reasons for the suspension. Here are some questions and answers on the scope and challenges of the SFC probe into Hanergy’s affairs.

1.) How Long Will the Investigation Last?

While the SFC completed 70 percent of its investigations within seven months during the year ending March, some probes have lasted significantly longer. Continue reading →

J Capital Says JD.Com Fakes Volume, Has ‘Misled’ Investors And Is Worth 30% Less; 30-50% of products on JD’s platform are sold to offline distributors rather than to end customers. “Our work suggests that the company is pretending to be far larger than it really is and is in effect paying people to run transactions through the online system in order to present the appearance of a growing e-commerce business. The company may use accounting tricks to move subsidies onto its balance sheet as assets.”

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http://finance.yahoo.com/news/analyst-says-jd-com-fakes-122540353.html

http://blogs.barrons.com/asiastocks/2015/06/19/jd-com-is-not-even-an-e-commerce-j-capital-sees-34-downside/?mod=BOL_hp_blog_astw

Fri, Jun 19, 2015, 1:25AM EDT – US Markets open in 8 hrs and 5 mins

This Analyst Says JD.Com Fakes Volume, Has ‘Misled’ Investors And Is Worth 30% Less

By John Seward16 hours ago

JD.Com Inc(ADR) (NASDAQ: JD) is “clearly misleading investors” about the nature of its business and faking a portion of its merchandise volume, an analyst said Wednesday. JD, which posted about $18.52 billion in sales last year, is sometimes seen as a Chinese version ofAmazon.com, Inc. (NASDAQ: AMZN). As of earlier this year, TENCENT HOLDINGS (OTC: TCEHY) held a 17.6 percent stake in JD.Com, which has a market capitalization of about $48.91 billion. The analyst, Anne Stevenson-Yang of J Capital Research, issued a Sell rating and $23.36 price target on JD.Com. JD shares are up about 53 percent year-to-date.

Stevenson-Yang, based in China, said JD does up to 50 percent of its business by brokering sales between distributors. “We believe much of this business occurs at a loss,” the analyst said. JD also sometimes buys from distributors and sells the products back to them at a 3 percent discount, Yang said. “The company may use accounting tricks to move subsidies onto its balance sheet as assets,” according to Yang. Part of the company’s revenue, again according to Yang, is derived from buybacks that its suppliers are required to make if products do not sell. Yang also said that land records indicate that JD has overpaid for its assets. JD has paid 20 percent more for 46 percent less land than Suning Commerce Group Co Ltd, a large Chinese retailer, buying in the same time frame, according to Yang. Continue reading →

Sunac Found Kaisa Had Zero Net Asset Value During Talks; Sunac’s Sun: While PwC found “a little” net value on Kaisa’s books, “in our understanding, its net assets are basically zero. I stand accountable for this conclusion.”

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http://www.bloomberg.com/news/articles/2015-06-18/sunac-says-it-found-kaisa-had-zero-net-asset-value-during-talks

Sunac Found Kaisa Had Zero Net Asset Value During Talks

June 18, 2015 — 5:03 PM SGTUpdated on June 18, 2015 — 6:06 PM SGT

Sunac China Holdings Ltd., the developer that last month dropped its acquisition of Kaisa Group Holdings Ltd., said it found the troubled developer’s net asset value was zero. The zero value discovered during the acquisition process was Sunac’s judgement and different from Kaisa’s auditor PricewaterhouseCoopers LLP, Chairman Sun Hongbin said in Beijing on Thursday. While PwC found “a little” net value on Kaisa’s books, “in our understanding, its net assets are basically zero,” Sun said. “I stand accountable for this conclusion.” Continue reading →

Focus Media’s Backdoor China Listing Hits Snag; Shell company Jiangsu Hongda New Material being probed by regulators

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http://www.wsj.com/articles/focus-medias-backdoor-china-listing-hits-snag-1434618919

Focus Media’s Backdoor China Listing Hits Snag

Shell company Jiangsu Hongda New Material being probed by regulators

SHEN HONG

June 18, 2015 5:15 a.m. ET

SHANGHAI—Chinese outdoor-display-advertising firm Focus Media Holding’s plan to float shares inside China has hit a snag after the shell company used for its backdoor listing said it is being probed by regulators. In a filing to the Shenzhen Stock Exchange dated Thursday, Jiangsu Hongda New Material, the target of Focus Media’s proposed so-called “reverse merger”, said the China Securities Regulatory Commission has launched investigations into Hongda and its controlling shareholder, Zhu Dehong.

Continue reading →

SEBI Hauls Up HBJ Capital For Misleading Investors And Bans It

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http://rakesh-jhunjhunwala.in/sebi-hauls-up-hbj-capital-for-misleading-investors-and-bans-it/

SEBI Hauls Up HBJ Capital For Misleading Investors And Bans It

Jun17th
201511 CommentsWritten by Arjun

HBJ Capital has landed itself into serious trouble with SEBI owing to repeated complaints from its clients. It has also contravened the law by collecting funds from investors and offering investment advice. SEBI has passed an order barring HBJ Capital from continuing its nefarious activities

HBJ Capital’s modus operandi for attracting clients was extremely simple. It played on the human emotions of greed and gullibility. Whenever a stock became a multibagger, HBJ Capital would release advertisements claiming to have discovered it. It also claimed that its subscribers were basking in great riches. HBJ also offered generous discounts to entice investors to join their services. Continue reading →