Bonus hogwash: The Stock Exchange and SFC continue to allow companies to make false and misleading statements about “bonus” issues of shares

http://webb-site.com/articles/bonusBS.asp

Bonus hogwash
11th June 2015

An awful lot of hogwash (we are using a family-friendly word) is produced in this town when companies announce “bonus issues” of shares, and the Stock Exchange and SFC continue to allow them to get away with making false and misleading statements in their “reasons for the bonus issue”. Indeed the very name is misleading – there is no “bonus” in issuing shares for free, because the increase in the number of shares is offset by a decrease in value per share.

Today’s glowing example comes from Forefront Group Ltd (Forefront, 0885). After a magical rise in its share price of 359% so far this year, it proposes, in its circular dated 12-Jun-2015, a bonus issue of 9 new shares for every share held. Economically this is the same thing as splitting each share into 10 shares. It makes no difference to the net assets of the company or the value of shares held by each shareholder, other than subtracting the costs spent on the exercise including producing the announcement and circular, sending out new share certificates and holding a general meeting.

Let’s analyse the false and misleading statements in the “reasons” section on page 9: Continue reading

中源协和 (Zhongyuan Union Cell & Gene: 600645 CH) 重组内幕交易悬疑; 干细胞概念水中月; 自2007年德源投资成为控股股东以后,中源协和就开始把干细胞业务当作主业来做,但是在经营业绩上并没有任何改观; 《st中源劫难未已》;《中源协和:3类干细胞药物临床申报再闯关》— 惊天骗局

http://www.yicai.com/news/2014/03/3530202.htmlhttp://guba.eastmoney.com/news,600645,84472511.htmlhttp://www.yicai.com/news/2014/08/4008680.htmlhttp://www.yicai.com/news/2011/01/664035.htmlhttp://www.yicai.com/news/2010/10/572868.htmlhttp://stock.sohu.com/20140418/n398424207.shtml

中源协和重组内幕交易悬疑:溢价3倍收购IPO弃儿

理财周报 杨流茂 2014-03-03 07:40:00

引发市场关注的却不是重组本身,而是重组前中源协和实际控制人李德福的增持是否涉嫌内幕交易的问题。 Continue reading

China Firms Fleeing U.S. Listings Leave Bondholders in Dark; “The implication of the privatization wave for bondholders is once the company is delisted, there is likely to be less financial disclosure.. This means that if the company does any profit warning, they are not required to file in the stock exchange anymore.”

http://www.bloomberg.com/news/articles/2015-07-03/china-firms-fleeing-u-s-listings-leave-bondholders-in-the-dark

China Firms Fleeing U.S. Listings Leave Bondholders in Dark

by Lianting Tu

July 3, 2015 — 10:52 AM SGTUpdated on July 3, 2015 — 5:26 PM SGT

The record pace of Chinese companies leaving U.S. exchanges is spurring concern among bondholders that transparency and corporate governance may worsen. Continue reading

Modus operandi of the SME IPO scam

Modus operandi of the SME IPO scam
N SUNDARESHA SUBRAMANIAN New Delhi
1 July 2015

The Securities and Exchange Board of India (Sebi) has unearthed a huge network of entities, which systematically rigged the initial public offerings (IPO) on the small and medium enterprises (SME) exchange platform. Their operations were so well-planned and coordinated that these carried on for more than a year beginning with preferential allotment several months before the IPO, continuing long after the listing.

Sebi’s investigation has revealed that the scamsters floated these firms, allotted fresh shares to themselves, distributed these to some front entities, sold these on IPO, funded the people who bought these on IPO , appropriated the IPO proceeds, and then funded the group of traders who were then hiking up the prices endlessly. All to convert unaccounted money into legitimate money that can be attributed a source: the stock exchange. Continue reading

With over a decade having passed since auditors’ role came into question in the Ketan Parekh stock market scam, auditing regulator ICAI has blamed “litigations and frequent adjournments” for delay in its action against the concerned member auditors.

http://www.business-standard.com/article/pti-stories/ketan-parekh-scam-icai-blames-litigations-for-delay-in-action-115063001033_1.html

http://www.business-standard.com/article/current-affairs/ten-years-on-icai-probe-into-gtb-auditors-role-still-not-complete-115062900065_1.html

Ketan Parekh scam: ICAI blames litigations for delay in action

30 June 2015

Press Trust of India

New Delhi, Jun 30 (PTI) With over a decade having passed since auditors’ role came into question in the Ketan Parekh stock market scam, auditing regulator ICAI has blamed “litigations and frequent adjournments” for delay in its action against the concerned member auditors. Continue reading

Even Fraud-Savvy Investors Often Look for the Wrong Red Flags

Even Fraud-Savvy Investors Often Look for the Wrong Red Flags

29 June 2015

M2 Presswire

New research identifies the types of investors who are vigilant about corporate fraud, but finds that most of those investors are tracking the wrong red flags – meaning the warning signs they look for are clear only after it’s too late to protect their investment. The work was performed by researchers at North Carolina State University, George Mason University, the University of Virginia and the University of Cincinnati.

“Individual investors get hurt if they own stock in fraudulent companies that cook the books, such as Enron,” says Dr. Joe Brazel, a professor of accounting at NC State and lead author of a paper on the work. “But we wanted to know how investors think about fraud and whether they try to protect themselves.” Continue reading

[From the Archives] Exit Barriers for U.S.-Listed Chinese Stocks: Chinese companies, some of which stung by accounting scandals on U.S. stock markets, are now struggling to privatize, delist and move on

http://english.caixin.com/2012-01-21/100350742.html

01.21.2012 15:30

Exit Barriers for U.S.-Listed Chinese Stocks: Chinese companies, some of which stung by accounting scandals on U.S. stock markets, are now struggling to privatize, delist and move on

By staff reporters Huo Kan in New York and Zhang Tao in WashingtonJinan-based software developer Pansoft Co. Ltd. says it’s going private, climbing aboard an increasingly crowded life raft as Chinese companies abandon U.S. stock investors. As of mid-January, some 20 of the 230 Chinese companies with stock traded on the New York or Nasdaq exchanges had announced privatization plans. At least eight in the group had completed the process. The privatization push, expected to accelerate in 2012, stands in stark contrast to the scene in early 2011 when Chinese companies were frantically competing to list on U.S. stock markets. That was before accounting scandals and short-sellers hammered a few high-profile companies, damaging the image of Chinese concept stocks overall. Continue reading

Mismatched regulatory regimes, How Chinese reverse mergers – and China MediaExpress – evaded scrunity through regulatory conflicts and loopholes

Click to access nyb_11-2_397-438_Teng.pdf

http://seekingalpha.com/article/677421-the-complete-list-of-small-cap-chinese-companies-on-the-nyse

Kevin QuonInvesting in the Lives of Others (648 clicks)

The Complete List Of Small Cap Chinese Companies On The NYSE

Jun. 22, 2012 7:52 AM ET  |  Includes: BORNCEAICHCCHINACMMCOCYDDANGDGWIYDLEJGUJKSLDKMDTNPDNTPSOLSTPSTVTSLWHWXXINXUEYGEZAZX Continue reading

[From the Archives] Reasons, Impacts, and Implications of the Delisting Wave of Mainland Chinese Enterprises Listed in U.S. Stock Markets; An increasing number of Chinese companies were delisted or privatized due to class action fraud litigations and short-selling pressure from institutional investors

http://economists-pick-research.hktdc.com/business-news/article/Economic-Forum/Reasons-Impacts-and-Implications-of-the-Delisting-Wave-of-Mainland-Chinese-Enterprises-Listed-in-U-S-Stock-Markets/ef/en/1/1X000000/1X07SY24.htm

30 Nov 2011

Reasons, Impacts, and Implications of the Delisting Wave of Mainland Chinese Enterprises Listed in U.S. Stock Markets

Since 2011, a series of Mainland Chinese enterprises listed in U.S. exchanges have been suspended, delisted, privatized, or reverted to over-the-counter transactions. This phenomenon attracted wide-spread media attention, and the companies involved include Xinhua Sports and Entertainment, Shanda Interactive Entertainment, FunTalk, Jiangbo Medicine Group, China Security Surveillance Technology, and Shandong Yuhe Group. This paper analyzes the reasons and impacts of the delisting wave as well as its implications on Hong Kong’s IPO capacities and the consolidation of the city’s status as an international financial center.

The variety of factors that triggered the delisting wave
Since mainland enterprises started going public in overseas markets in early 1990’s, the U.S. has been a main destination. There have been four episodes of IPO booms in America (see Table 1), with Internet companies such as Renren, NetQin, Jiayuan.com, and Qihu 360 Technology going public in the first half of 2011. The turning point was the second half of last year, when an increasing number of Chinese companies were delisted or privatized due to fraud litigations and short-selling pressure from institutional investors. Continue reading

Toshiba may need to mark down past earnings by over US$1.22 billion, nearly triple an earlier estimate, after an ongoing investigation into past accounting practices found more irregularities

http://uk.reuters.com/article/2015/07/03/uk-toshiba-accounting-idUKKCN0PD2FS20150703

http://asia.nikkei.com/Business/Companies/Toshiba-seen-lopping-more-than-150bn-yen-off-past-profits

Sat Jul 4, 2015 12:58am BST

Toshiba accounting errors may be over $1 billion – report

Toshiba Corp may need to mark down past earnings by over 150 billion yen ($1.22 billion or 0.78 billion pounds), nearly triple an earlier estimate, after an ongoing investigation into past accounting practices found more irregularities, a report said on Saturday. Continue reading