China MediaExpress Holdings, Inc. (fka CCME)

[bullmarkets]

"Hypothecating Cash" 101: How CEO May Have Cheated

As in to hypotheticate cash.

"I believe that the likely position here is that CCME was not a fraud, but the CEO/Chairman was too greedy and was profiting by 'hypotheticating' the cash balance.
This would explain DTT's original verification of cash balance and the low reported interest on the cash (the point that has concerned me most of all the shorts points).
The chairman may well be stalling for time now so that the cash balance can be 'released'
from hypothecation- if the loan it secured can be repaid."

and

"To oversimplify- I understand in China banks will take a deposit from one company and lend it to 'a connected party' at a slightly higher rate providing the deposited amount is 'hypothecated' i.e. pledged as security.
I believe that is what happened here- the cash was real and deposited but the CEO may have pledged it and that act has backfired (as he and the bank would be reluctant to admit what was done).
I know that to a banker in the US this may seem to be an un-acceptable practice, but the practice in China is quite different-"

Source for both quotes: This middle of this thread: http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_C/threadview?bn=101061&tid=94993&mid=95219

-Andrew