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So people who know more about macroeconomics than I; I'm just curious what are the possible contagion effects if it turns out that China has endemic accounting fraud that masks the losses and liabilities of many Chinese corporations? I have seen several signs from securities regulators that a lot of accounting of Chinese firms may be complete bullshit. (1) For example, numerous Chinese firms have been found by the SEC and federal courts to have committed accounting fraud. (2) The PCAOB has been (in my view, admittedly anecdotally) cracking down on American based auditing firms that have been conducting terrible and/or completely fictitious audits of Chinese firms. (3) An independent SEC judge recently imposed a six month practice suspension on the Chinese branches of the Big Four accounting firms for failure to comply with SEC investigations of accounting fraud (which the Big Four attribute to Chinese secrecy laws or something). (4) There has been a recent rise of Chinese corporations conducting reverse-mergers of U.S. shell corporations in order to conduct a form of IPO in U.S. equity markets without going through SEC registration procedures, I assume in order to mask the true financial condition of said corporations while opening up new avenues of raising capital (5). I make all of these observations to ask; if there really is widespread overvaluations of firms in China, what potential effects could that have on the broader Chinese economy and does that fit into the broader bear view of China that many posters in this thread take? Some sources to back up my personal observations of noncompliance with accounting and auditing standards: 1: "Accounting Fraud In US-listed Chinese Companies" - Financier Worldwide http://www.financierworldwide.com/article.php?id=8480 2: "Activity Summary and Audit Implications for Reverse Mergers Involving Companies from the China Region: January 1, 2007 through March 31, 2010" - PCAOB http://pcaobus.org/Research/Documents/Chinese_Reverse_Merger_Research_Note.pdf 3: "U.S. SEC judge bars "Big Four" China units for 6 mths over audits" - Reuters http://www.reuters.com/article/2014/01/23/sec-china-bigfour-idUSL2N0KW22720140123 4: "Table of Chinese Reverse Mergers on U.S. Exchanges" (2011, though it's still happening despite regulator pushback) - Bloomberg http://www.bloomberg.com/news/2011-06-22/table-of-chinese-reverse-merger-companies-listed-on-u-s-stock-exchanges.html 5: "Investigations and Litigation Related to Chinese Reverse Merger Companies" - Cornerstone Research http://www.cornerstone.com/getattachment/2f082047-f409-4e38-bab2-f62829b8087a/Investigations-and-Litigation-Related-to-Chinese-R.aspx
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Apr 18, 2014 11:36
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Fall Sick and Die posted:
While you obviously can already smell the stink on this, rule of thumb used at the SEC is that if it guarantees rates greater than 10% its probably a Ponzi scheme.
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May 9, 2014 00:40
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FrozenVent posted:I was operating under the assumption that the proposed trans-pacific rail system wouldn't be HSR; if the intent was for it to be HSR, I'd like to edit my previous posts in the following manner: Yeah the whole thing is a HSR passenger train, but don't edit your posts, they're pretty educational about transcontinental logistics. http://www.chinadaily.com.cn/business/2014-05/08/content_17493399.htm
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May 12, 2014 04:10
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