Day: September 19, 2015

Here’s why one hedge fund manager thinks Alibaba could be a big fraud

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http://fortune.com/2015/09/18/alibaba-faking-numbers-hedge-fund/

Here’s why one hedge fund manager thinks Alibaba could be a big fraud

Jen Wieczner

SEPTEMBER 18, 2015, 5:42 PM EDT

Compared to Amazon and UPS’s figures, Alibaba’s numbers don’t add up, he says.

Alibaba has already had a terrible first year since its IPO: Its shares are down 28%. But one well-known hedge fund manager has a suspicion that, if true, could potentially destroy Alibaba’s stock completely.

In a post on his blog this week, Bronte Capital hedge fund manager John Hempton laid out reasons why the Chinese e-commerce company’s delivery figures seemed fishy. The possibility that Alibaba  BABA -1.36%  might be a fraud, he wrote, “is a thesis worth testing”—and plans to gather evidence, and potentially short the stock, depending on what he finds. Continue reading →

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Can we trust Alibaba’s numbers? Auditor has never faced U.S. regulatory scrutiny; PwC Hong Kong signed only Alibaba audit, but China forbids U.S. from inspecting that firm

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Can we trust Alibaba’s numbers? Auditor has never faced U.S. regulatory scrutiny; PwC Hong Kong signed only Alibaba audit, but China forbids U.S. from inspecting that firm
Francine McKenna, MarketWatch
15 September 2015
PwC Hong Kong signed only Alibaba audit, but China forbids U.S. from inspecting that firm

Barron’s spent a lot of time analyzing the Alibaba Group Holding Ltd. numbers and strongly questioning the stock’s future, even though those numbers have never been verified by an independent third party fully vetted by U.S. regulators. Continue reading →

Barron’s: Alibaba Objects, but We Stand By Our Cover Story; Alibaba: Why It Could Fall 50% Further; The Chinese Internet giant’s stock has been plunging amid an array of problems. Expect more trouble ahead.

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http://www.barrons.com/articles/alibaba-objects-but-we-stand-by-our-cover-story-1442636537

Alibaba Objects, but We Stand By Our Cover Story

The Internet giant says our article “contains factual inaccuracies and selective use of information.”

Sept. 19, 2015 12:22 a.m. ET

Alibaba Group Holding sent a letter to Barron’s objecting to our cover story of Sept. 14, “Alibaba: Why It Could Fall 50% Further.” The letter, printed in full below, maintains that the story “contains factual inaccuracies and selective use of information.” After thoroughly reviewing the letter, Barron’s stands by the story, with the exception of one error. Our discussion of that error appears at the end of the letter. Continue reading →

Deloitte Resigns As Auditor For Tianhe Chemicals

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Auditor of Morgan Stanley-backed Chinese company resigns
Jeff Horwitz
Associated Press
18 September 2015
WASHINGTON (AP) — The auditor of a major Chinese chemical company that was the subject of an Associated Press investigation and is backed by Morgan Stanley has resigned amid accounting concerns, further damaging the prospects of Morgan Stanley‘s largest investment by its Asian private equity arm. Continue reading →

Fraud, financial distress fuel Asian corporate blow-ups – CLSA

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Fraud, financial distress fuel Asian corporate blow-ups – CLSA
Lawrence White
14 September 2015
HONG KONG, Sept 14 (Reuters) – Rising cases of accounting manipulation and financial distress caused by Asia’s economic downturn are driving record levels of corporate blow-ups in the region, according to a report by investment bank CLSA published on Monday.

The level of value-destroying companies in Asia, defined as offering poor return on investors’ money, has risen to a record level of 38 percent, CLSA analysts said in the report, highlighting the rising risks posed to investors. Continue reading →

SEC Flexes Its Muscle On Accounting Fraud And Targets More Individuals

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SEC Flexes Its Muscle On Accounting Fraud And Targets More Individuals
David Woodcock
18 September 2015
The Securities and Exchange Commission recently announced the settlement or filing of a number of significant accounting fraud cases. Coupled with recent statements by the SEC and the Department of Justice, it is clear that accounting fraud is a priority and that individuals are in the cross hairs. Continue reading →

By issuing a new policy that requires companies to identify every wrongdoer within the organization, regardless of rank, or be considered uncooperative, the Justice Department is telling companies to investigate more thoroughly

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http://www.nytimes.com/2015/09/15/business/dealbook/theprospects-for-pursuing-corporate-executives.html?emc=edit_dlbkpm_20150914&nl=business&nlid=36114517&_r=0

The Prospects for Pursuing Corporate Executives

SEPT. 14, 2015

By PETER J. HENNING

The Justice Department wants the message to go out that federal prosecutors will be taking aim at executives over their role in corporate misconduct by issuing a new policy that requires companies to identify every wrongdoer within the organization, regardless of rank, or be considered uncooperative. Continue reading →

Incorrect accounts are the board’s problem

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http://www.thestar.com.my/Business/Business-News/2015/09/19/Incorrect-accounts-are-the-boards-problem/?style=biz

Incorrect accounts are the board’s problem

Saturday, 19 September 2015

By: ERROL OH

WHEN the accounts of a listed company turn out to be unreflective of the company’s financial performance and position, there are several options for enforcement action. The worst-case scenario (for those responsible for the accounts, that is) is when the regulators take court action that may lead to heavy punishment. Perhaps the best-known example began in July 2007, when three former top executives of Transmile Group Bhd were charged with abetting the cargo airline in making a misleading statement about reported revenue of RM338mil. This referred to the company’s quarterly report that contained the unaudited consolidated results for the financial year ended December 2006. If convicted, the trio – Gan Boon Aun, Lo Chok Ping and Khiudin Mohd – are liable to a fine of not less than RM1mil and a prison term of up to 10 years. Continue reading →

Department of Special Investigation (DSI) has filed criminal charges against Chai Bunnag and 11 accomplices over the alleged manipulation of Solution Corner 1988 (SLC) shares back in 2010

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DSI accuses 12 of share manipulation
16 September 2015
The Nation12 called to report after new evidence in share case

THE Department of Special Investigation (DSI) has filed criminal charges against Chai Bunnag and 11 accomplices over the alleged manipulation of Solution Corner 1988 (SLC) shares back in 2010.

DSI sources said notices have been issued for the accused to report to DSI officials by the end of this week. The investigation into this case moved forward after authorities found new evidence that was not known in 14 previous and related cases dropped by public prosecutors. Continue reading →

Stock manipulation: GR Cables

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Stock manipulation: GR Cables
16 September 2015
Why is the loss-making GR Cables generating such humungous gains and displaying extreme volatility? GR Cables supposedly manufactures telecom cables. In its annual report for FY13-14, the management states that, due to non-availability of sufficient working capital facilities, it was unable to execute any business. They further mention that they are exploring various options to raise the required funds through additional equity and debt. In FY13-14, GR Cables reported revenue of just Rs4.78 lakh and a net loss of Rs30.01 lakh. In FY14-15, the Rs2-crore market-cap company reported negligible sales and a net loss of Rs27.88 lakh. It has reported a net loss in each of the past 18 quarters. Yet, over a period of about 18 months, the stock rallied 305% to Rs0.77 on 8 September 2015, from Rs0.19 on 26 February 2014. Over this period, on most occasions, there have been just one or two trades a day. Much of the gain came between 6 April 2015 and 1 June 2015. In this two-month period, the stock shot up 197%, from Re0.31 to Re0.92. By the end of June 2015, the stock declined 27%, to Rs0.67, before rallying again. Why is a loss-making company generating such humungous gains and displaying extreme volatility? Will the regulators investigate?