Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I still think this knowledge is enough to give Shorts confidence to write their short pieces. Because of this disconnect in PCAOB standards the whole China sector is potentially vulnerable - even BIDU. (see: my previous post 25740 and the linked post by Remoteshots re: PCAOB standards). Like UpstateChris is so fond of reminding us "Caveat Emptor" or "Buyer Beware."
The basis of the Short Strategy could very well have come from understanding the auditing problems that were arising between China & US accounting standards. This is what I was referring to when I said:
"I think the lack of a PCAOB standard is at the center of this problem with Deloitte."
All the shorts needed to know was the PCAOB vulnerability was there in the auditing process. Just push it to the tipping point to expose the weakness in auditing standards. If there really was fraud at CCME or the other companies - then it's a bonus. In the Markets, which trade on the emotions of fear and greed, the fear of fraud is as potent as fraud itself. Push Deloitte to the weakness and they have to step aside - because there is a real disconnect. I think the Big Money Shorts & Hedge Funds knew this.
Blinded by fear, blinded by greed... What's the difference?
Further info in WCT Bills blog update
WCT Bills blog update
March 21st, 2011 CCME Weird...
The thing with CCME is that every answer/data that comes forth only begets further confusion and questions...
A few other pieces of data and statements that I know of...
I spoke to the CEO by phone last week... he told me...
1. No more resignations by board members
2. Company is still pursuing the independent forensic audit path (as of late last week)
3. He shouldn't be talking to me.... followed by a goodbye.
Since no more resignations, that means the other independent auditors are still on board... doesn't this contradict Dorothy's resignation letter a bit?
If an independent forensics audit is in the works... then this halt will last for 6-8 weeks.
Questions I have:
Is this CV Starr lawsuit proof of fraud? Or is Starr just posturing to force the board to act?
If fraud (which appears to be the case), are the independent auditors also in on the fraud?
How big is this fraud? Does the company have $200M of cash? or $100M? or $50M?
There are just so many questions... and I'm not sure if I'm asking the intelligent ones?
Also, my own checks show that CCME's head of independent audit, a former PWC auditor, is still with the company as of Monday (today).
Finally, my check with the Fuzhou gov't friend tells me that the company is a fraud, controlled by the Lin brothers... but he doesn't know how big it is.
I have not tried to contact anyone inside CCME since last week. With all the lawsuits and coming investigations, why bother to ask? No one's gonna talk. And if I pester them, they might never pick up my phone call again...
Man... weird. I feel like I'm watching an episode of... As the World Turns?
I feel bad for those who had a significant portion of their portfolio in CCME. In such a situation, I'm sure everyone would want as much data and insight as possible to assuage their frustration. Unfortunately, I don't have much other than theories, hunches, and unconfirmed rumors. I feel I've poured much ink into this company already and alas, here we are.
So, I'm just going to lie low and wait for more data to confirm a few of the theories out there.
Barrons - Trading Halt, Resignations Raise More Questions About China MediaExpress
http://online.barrons.com/article/SB50001424052970203748204576202581430553882.html?ru=&mod=barrons_msn%3Ca%20href=
WCT Bills is still out there watching.
WCT Bills blog update
GM was still trading after its shares were worthless.
Starr files their case with virtually no new info - MW, Citron, etc? I think it was done intentionally in a manner that doesn't expose them to any additional liability and distances them from the position of fiduciary responsibility of Dorothy Dong/Starr Board Member.
WCTBills is Dr. Huifeng Chang:
"Dr. Huifeng CHANG —
CEO of CSOP Asset Management Limited
Dr. Huifeng Chang, MBA. Prior to joining CSOP in 2008, Dr. Chang worked at Citigroup’s Global Equity Division in New York since 2000. His experiences include equity proprietary investments, equity derivatives sales and equity trading risk management. Before moving to Wall Street, Dr. Chang was a researcher, consultant and system developer at Kamakura in Hawaii, specialized in asset liability management (ALM) for banks. Before switching his career into finance, Dr. Chang was a post-doctoral researcher at University of Hawaii, where he received Ph.D. in soil physics in 1991 and MBA 1995 respectively. Dr. Chang is licensed with FINRA Series 55, 7, 63, and GARP’s FRM."
Doesn't look like the resume of a 20 year old to me! This whole experience has been devestating to me financially but I'm not going to blame WCTBills or any of the other hardworking longs on this board. Michael is right, were it not for WCTBills = things would be much worse...
There are also graphic descriptions of the intermediate states or Bardos
On the contrary, Buddhism has a very developed literary tradition regarding Hell/Hells.
The SEC could find out
Yes Andrew, we still don't have enough info to make an assessment of the situation. No need to damage our own reputations by giving opinion based on incomplete information.
That could explain the tremendous volume we saw at times.
It still remains to be seen what Hank Greenberg will do, he has tremendous guanxi (literally: “networks of mutual support”) in China as he is one of the most prominent Americans there and a pioneer in Sino-American relations. If the Chinese wish to do business with the West they must needs protect these endeavors. I'll prepare for the worst and hope for the best.
Northland stopped coverage of CCME.
Hank Greenberg has no love for Eliot Spitzer and his Hedge Fund buddies.
"Fraud allegations
On March 15, 2005, AIG's board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism from Eliot Spitzer, attorney general of the state of New York. On May 26, 2005, as part of a series of actions against leaders of large corporations, Spitzer filed a complaint against Greenberg, AIG, and Howard I. Smith (ex-CFO of AIG) alleging fraudulent business practice, securities fraud, common law fraud, and other violations of insurance and securities laws. Greenberg's public statements show that he found the Spitzer investigation to be very troubling.
Criminal charges
After a subsequent investigation, however, all criminal charges were dropped, and Greenberg was not held responsible for any crimes. The State Attorney General's office however is still pursuing Greenberg in civil court for many of these same criminal allegations. Greenberg settled on a $15 million fine for the accusations of fraudulent AIG financial positions.
Civil charges
Spitzer did, however, bring civil charges against Greenberg, though he dropped two of the six initial charges in September, 2006.[9] Greenberg's attorney claimed vindication with the dropping of the two charges, but Spitzer's office maintained that the four remaining charges are the core of the State's original charges." Source: Wikipedia
To whom do we send our names and country to?
White or Red? Red I'm sure
Kinda like Karaoke?
Not the Yankees! LOL
C.V. Starr contact info:
C.V. Starr
Fleishman-Hillard Verification
File name p110314.pdf
Document Type PDF Document
File size 167660 bytes
Page size 8.5 x 11.0 inches
PDF version 1.5
Page count 2
Encryption None
Modification Date 03/14/11
Title Draft V1 – For Internal Circulation Only
Content Creator Microsoft® Office Word 2007
PDF Producer Microsoft® Office Word 2007
Creation Date 03/15/11
Author Fleishman-Hillard
The second FAQ:
FAQs
Q: How did CCME rank in the recent China Outdoor Advertisement Industry survey?
We were ranked as one of the "Top 10 Special Channel Media suppliers" on the survey conducted by China Advertising Association (Government Affiliate) published in January 2011.
www.cnadtop.com/news/nationalNews/2011/1/26/16db29c6-5e58-4bed-be1a-0b8daacadb34.htm
Q: Who is CCME's registered independent public accounting firm?
Deloitte Touche Tohmatsu Hong Kong audits our consolidated financial statements.
I've got "1" and proud of it...
Tools / Get Info / Details
Do you mean Zheng?
Ping might have even colluded, and what the email alluded that ping did collude with cheng to defruad investors.
Michael I totally agree Global Hunter in not to blame. But if Deloitte knew all along there was a disconnect in accounting standards that would not meet greater scrutiny, then what responsibility do they bear?
China RTO Stocks Slide After China Media Bombshell, by Scott Eden
Here are the relevant parts:
"NEW YORK (TheStreet) -- A day after China MediaExpress(CCME_) revealed that its former auditor believes the company is worthy of an investigation into possibly dubious accounting practices, a handful of small-cap Chinese stocks sold off sharply on Tuesday.
Fraud allegations have buffeted share prices among these names since last year, as more of the investing public begins to doubt the integrity -- rightly or wrongly -- of financial statements emanating from the People's Republic.
Of course, on Tuesday, the nuclear crisis in Japan and the broad and vicious slide in equities around the world didn't help Chinese small-cap names.
But more than a few of those stocks, most of which came public in the U.S. through a controversial process called a reverse merger, declined by more than 6% on heavy volumes during Tuesday's trading session. Many have been in the public eye before, accused of financial chicanery of one sort or another by short sellers..."
"Meanwhile, the SEC continues to investigate the Chinese reverse-merger phenomenon. According to people involved in the probe, the agency is examining individual companies as well as the so-called "gatekeepers" who help Chinese businesses gain entrée into U.S. markets, including audit firms, law firms, stock promoters and investment banks. The SEC has declined to comment on that investigation.
Proponents of the sector say that all the hullabaloo is just that. Incidents of fraud among Chinese companies, bulls say, are no lesser or greater than those among public companies doing business anywhere, the U.S. included.
Chinese companies have started to fight back, using a number of techniques to convince the investing public that they're on the up and up and that their stock prices -- caught up through no fault of their own in the general negative sentiment surrounding the sector -- have declined so much that they no longer reflect the true value of their businesses.
Some companies have announced share-buyback plans. Others have pledged to fire their small auditors and hire one of the Big Four accounting firms. Still others under more direct assault by shorts, such as China Green Agriculture, have been forced to hire crisis managers and issue point-by-point rebuttals to short sellers who have purported to offer evidence of fraud. (China Green is also the subject of an informal SEC inquiry.)
It remains to be seen how China MediaExpress might go about defending itself. The news Monday was damaging. The company said its CFO and audit firm had resigned. The Chinese affiliate of Deloitte & Touche told the company that it had found enough "irregularities" that they warranted an investigation into its accounting.
China Media, which sells ad space on LED screens installed on intercity buses, is a slightly different species than the typical RTO. The company originally went public in the U.S. through a reverse merger, but was then acquired by a special-purpose acquisition vehicle, or SPAC. The original SPAC investors have long ago sold their shares, however. Starr Investment Group, a fund run by Maurice "Hank" Greenberg, former chief of AIG, subsequently took a big chunk of China Media stock. The fund owns a little more than 3 million shares, or about 9% of the total outstanding shares, and Greenberg's decision to buy into the company had been used by long-side investors as evidence that China Media couldn't be fraudulent. How else would Greenberg, who must have run vigorous due diligence on the company, have taken such a big stake?
China Media's travails bear an uncanny resemblance to another Chinese company in a very similar business: SearchMedia Holdings(IDI_), which sells ad space on billboards in China. It, too, was acquired by a SPAC, though it hadn't gone through a reverse merger. It was still a private company in China. Not long after completing the deal, the Los Angeles-based promoters of the SPAC, called Ideation, discovered that they'd acquired a business that had been cooking its books. Ideation fired Chinese executives and restated past results; more than half the revenue SearchMedia had claimed prior to the SPAC acquisition turned out to be essentially fictitious. SearchMedia's shares now trade at $1.85. They were down 12% on Tuesday."
Deloitte wanted to get paid. There may be a liability issue here for shareholder against Deloitte.
Accounting standards? If these differences were known upfront why did DT not carefully warn the company ...
Wow!!! WTF??? Didn't anyone tell Zack? Maybe the short squeeze has been rescheduled?
Bill thanks for everything... I think Jacky was unable to reconcile Chinese/US accounting standards to Deloittes liking - even though they know the whole sector is a big disconnect. They want to step back - but they want to make the money. It's like years ago in the music business when I had a lawyer who told me he wouldn't litigate and I said "Well then what do I need you for?" In the end Hank Greenberg is the only one who can fix this, I like your tender offer idea. Then maybe they could go private or relist in Hong Kong when accounting standards are more compatible.
"I hope Hank Greenberg won't take this lying down."
WCTBills Blog Update
WCTBills
The basis of the Short Strategy could very well have come from understanding the auditing problems that were arising between China & US accounting standards. This is what I was referring to when I said:
"I think the lack of a PCAOB standard is at the center of this problem with Deloitte."
All the shorts needed to know was the PCAOB vulnerability was there in the auditing process. Just push it to the tipping point to expose the weakness in auditing standards. If there really was fraud at CCME or the other companies - then it's a bonus. In the Markets, which trade on the emotions of fear and greed, the fear of fraud is as potent as fraud itself. Push Deloitte to the weakness and they have to step aside - because there is a real disconnect. I think the Big Money Shorts & Hedge Funds knew this.
The Rabbit Hole
Great find SD!
Great find Player One! This speaks to what I said earlier and relates to Remoteshots post I was commenting on. I think the lack of a PCAOB standard is at the center of this problem with Deloitte. Companies like Deloitte's hands are tied if they need to really deliver because of PCAOB limits.
My Post
Remoteshots Post
Excellent post Remoteshots. I agree, this whole process is in the netherworld between PRC-GAAP (China rules) to US-GAAP (US rules). This is a veritable chasm of grey areas that are relatively new arenas in the capital markets. Were it not for Hong Kong's long history of participating in the capital markets of the West it could be even worse how things would get "lost in translation." I think it behooves us to be patient until more facts come to light. Wouldn't we feel stupid if this was the result of a disconnect between PRC-GAAP & US-GAAP protocols?
That being said, I feel really stupid for breaking my own investment rules on weighting & risk on this one. But I don't blame the group of intelligent hardworking people that have been contributing on this board for so long.
But yet, I still keep in mind that Sino-American capital markets are a new frontier.
Value1008, This is probably the best post today. When things like this happen people tend to "throw the baby out with the bathwater." So many things have been verified, I still feel it is probably a good company in a bad situation. Time will tell...
"The greatest fear, is the fear of the unknown."
China MediaExpress Holdings, Inc. Announces Resignation of Independent Auditor and Chief Financial Officer
CCME
Miyamoto Musashi, The Book of Five Rings "You win battles by knowing the enemy's timing, and using a timing which the enemy does not expect."
Yes bUrRpPPP, that's what made me think of it...
"Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win." Sun Tzu, The Art of War
or this gem:
"Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage." Niccolo Machiavelli