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I rose the challenge to produce evidence that wrong-doings is China got persecuted. Read the excerpt:
Yingxia Jiao was sentenced to death for fraud in China.
Harbin Intermediate People's Court Sentencing December 30, 2010
Jiao Yingxia found guilty of fraud and sentenced to death and deprived of political rights for life and confiscation of all personal property;
Yang Chunxiao was found guilty of fund-raising fraud and sentenced to death, deprived of political rights for life and confiscation of all personal property;
Chen Weiming was found guilty of fraud in financing sentenced him to life imprisonment and deprivation of political rights for life and confiscation of all personal property;
Deng Lanting was found guilty of fraud in financing sentenced him to 13 years imprisonment and fined 300,000 yuan.
The remaining 11 defendants were sentenced to imprisonment ranging from 1 to 10 years and fined 20,000 to 100,000 yuan.
Companies get listed here because the threshhold is lower here than in China and HongKong. The availability of RTO just low the cost of going public as well. I am not sure about avoiding legal trouble. Look at the lawsuits CCME is getting into.
Here is a list of the few companies persecuted for their wrong-doing.
http://www.sngu.com.cn/xingudongtai/201103/24227794.html
Admitted, all are China-listed companies.
I posted a similar link here yesterday. Apparently there are people watching companies committed frauds in securities in China:
http://www.sngu.com.cn/jishibobao/201103/21224420.html
I do not think company will go dark. There is a lot greed at play here; there is lot of cultural clash at play here; There might be some ingenious calculation to trap the shorts here. Everyone is by himself/herself.
But I don't see it go dark. If it ever does, Mr. Cheng goes to jail. Mr. Cheng does not want to go to jail, not without trying to salvage the company and its stock. After all, he owns majority stake and it is to his own benefit.
I buy the reboot theory and I hope Mr.Cheng will deliver.
Chinese government persecute fraudulent personnel in public company:
http://news.wenxuecity.com/messages/201103/news-gb2312-1315790.html
Something for Mr. Cheng and his associates to think twice?
Sorry the article is in Chinese.
Now we are praising the CEO now? could it be that he upset DTT and halt the trading on purpose? So that we can "clown in the same cage with the shorts" for some time.
If the stock open up in low single digits, I will be loosing so much money that none of my clients will be happy. But why do I feel so funny now?
If Starr can put their 3 million shares back to the company or the management, shouldn't we all be able to? I do not see the rationale for them to get a favorable treatment.
Starr failed to watch for our interest. Not that they are obliged to, at least some of us bought into the company because of their purchase. Now things are not going in their way and all they think off is to get their money back and then some at our expenses?
It doesn't sound right.
My speculation and this is the best case scenario: one year after buying into CCME, Starr found it is not the innocent boy that was presented to them during the fact-finding phase. West-east cultures clash: money is not controlled the way Starr wanted, Foreign Business Conduct Act is not been upheld, etc. It gets hot in the board room sometimes.
DTT was hired at Starr's request back in 2009, when the party are at good terms. DTT did its standard audit and signed off the 10-K.
In 2011, differences between Starr and CCME became serious and Starr was trying to leverage DTT to bring CCME into compliance. Yet, Mr. Cheng and his local management team (Jacky is from HK and not part of the inner circle) continues to be defiant.
DTT is under pressure to cover its own behind, especially with all the short seller attacks and anonymous emails. Also, Starr wants DTT to produce the talk points so it can tame the local management.
Mr. Cheng is not going to change. So the resigns.
Is "material" 10%? and "irregularities" somewhat less than that?
The auditors of this board are appreciated to shine light on these terms.
I noticed that Starr is only seeking to have its money returned in the US lawsuit. What about this other provisions that it is entitled to according to the mutual agreement? Are are also suing CCME's founders in HongKong to enforce those nasty penalties? Anyone following that story?
If they are not seeking penalties according to the agreement, what do that say about their understanding in the situation?
I will second you. But I am not the lawyer here.
That is nothing. Typically a local communist youth league are looking for project to get involved so he/she can report to the superior of the activity. Kind of like our high school community service program. Kids here can get into a better college if they show more interest in that regard. In China, mostly is the young cadre will get promoted to a higher position.
Overall it is very minor. Kind of old-fashioned if you want to press me to say.
Teabanker, You apology accepted. Now we are cool.
Texbanker,
You did not "imply", instead you stated explicitly that they are still third world trash and I take issues with that.
Your original post in full text:
Anyone can screw anyone anytime. That's why trust is a virtue. My limited knowledge of Chinese culture is that trust is reserved amongst family only. Everyone else, beware. Our country is based upon community trust. Its why we Americans have far exceeded the Chinese economically, socially and culturally for hundreds of years with less people and resources. My mistake was believing the Chinese in these businesses like CCME were trying to enter First world. Apparently they are still third world trash. My bad.
I am disturbed by your racism here. How does Madoff compare to to Cheng? Something like 100 times larger in scale? There are bad people in every race, and I am sure you do not want to descend to their level.
I am a Chinese and I hate fraud, just like you do.
On one hand, I can say that there is an underlining viable business. I have ridden some of the buses and seen the ad played. Here I differ from shorts and bashers such as Citron and Muddy Water.
I do not think the CEO is going to throw his work of the past 8 years under the bus all of sudden. Before it is over, he will put up a good fight. Only wish he has got good advisors.
If you look for signs that whether he is serious about defending shareholders value, wait to see whether a new auditing firm is hired.
To explain what just happened, I think there is some animosity between the company and Starr. Remember DTT is brought in by Starr. It is DTT's job to find bones in the eggs , to use a Chinese saying, because much is at stake: earn-out shaers, Starr's put option, and founders' penalty payment.
In the end, the two sides will come to terms and they will present a unified front and things will move on.
All that will happen while a forensic auditing is going on.
I do not think Jacky Lam had been a real CFO. At the best, he has been a glorified IR person and may not have the real power. Remember, he was not appointed by Starr, but rather, brought in by the original SPAC who sold the CCME shell. He has been ineffective to begin with, and his resignation probably does not make matters much worse as far as whether the company can do an audit without him.
I remember Jacky Lam stammered over the Capex number during the conference all. Any reasonably effective CFO would memorize the number right away. CCME has an extremely simple business model and does not use a lot of Capex.
I am troubled by Dorothy's resignation more. If she works for Starr and ideally her action is certified by her true boss. But she may acted on her own judgement and broke rank with the Starr management. If not, you can be sure that there is no much love left between Starr and the management. In a sense, it explains the DTT resignation as well. So DTT quit, so did Dorothy. The root cause is probably the relationship between Starr and the management at the time.
Cash has definitely been compromised, one way or another, with or without DTT checking. You give a Chinese management close to $200 million in cash and the company does not need that kind of cash in near future, you are giving a kid a bag of candy and expect he/she to not touch it. The management may think it is a discretion within the management's power. Starr and its representative (Dorothy) may not think it is funny. Part of that is cultural, part of that is personal. People need to learn to get along.
All in all, I am preparing for the worst. As the power seems to be with the management, I am hoping that the management can make the right decision at this point, not just for us longs, but also for themselves.
- Eric.
I agree. The trading pattern suggests that at least a couple of days before the halt, some trading based on material and non-public information was going on.
The people among us who know about to to handle this kind of things should write to SEC and alert them to initiate an investigation.
I am stockgnenius (Eric) who translated Tom'sletter. After the CCME experience, I am not so sure about my alias anymore. But this is the alias I chose, this is what I am staying with.
I have a long position of an unknown amount. I will know that by Monday if you know what I am talking about.
What a difference one week could make! At this time last week I was in China, riding CCME-present buses and estimating the ridership and revenue, getting confident that there was an viable business behind the ferocious short sellers and some what awkward management who does not know how to communicate with investors. I thought I was joining the crusade of defeating the evil short seller army attacking this precious Chinese stock once and for all.
Today, I woke up at 5:00AM after struggling with jet lag for two hours. I found the best use of my time was to translate the letter into Chinese. Tom's letter was very well written so the translation was not too hard. When I translated the letter, I did it as if I was talking to a brother who deviated from the right teachings of our parents: "Come back to the light side, Mr. Cheng. despite all your wrong-doings, we still love you".
Honestly I do not know whether Mr. Cheng is on dark side right now. I am prepared for the worst, but I am hoping for the best.
After all, shorts and longs seem to be all in Mr. Cheng's hands now. His attitude and action will determine who win and who lose in the war.
To me the war is not over yet.
I am a Chinese and I fight against fraud.
- Eric
I am stockgnenius (Eric) who translated Tom'sletter. After the CCME experience, I am not so sure about my alias anymore. But this is the alias I chose, this is what I am staying with.
I have a long position of an unknown amount. I will know that by Monday if you know what I am talking about.
What a difference one week could make! At this time last week I was in China, riding CCME-present buses and estimating the ridership and revenue, getting confident that there was an viable business behind the ferocious short sellers and some what awkward management who does not know how to communicate with investors. I thought I was joining the crusade of defeating the evil short seller army attacking this precious Chinese stock once and for all.
Today, I woke up at 5:00AM after struggling with jet lag for two hours. I found the best use of my time was to translate the letter into Chinese. Tom's letter was very well written so the translation was not too hard. When I translated the letter, I did it as if I was talking to a brother who deviated from the right teachings of our parents: "Come back to the light side, Mr. Cheng. despite all your wrong-doings, we still love you".
Honestly I do not know whether Mr. Cheng is on dark side right now. I am prepared for the worst, but I am hoping for the best.
After all, shorts and longs seem to be all in Mr. Cheng's hands now. His attitude and action will determine who win and who lose in the war.
To me the war is not over yet.
I am a Chinese and I fight against fraud.