China MediaExpress Holdings, Inc. (fka CCME)

[martych]

While it's true we haven't seen any proof, that's because of the confidential nature of what can and can't be disclosed. The tells are pretty apparent that there is something wrong that is consequential. The DTT resignation indicates they found irregularities and could no longer trust management representations. While it's true the irregularities could be short of fraud, the underlying issue is that they exist and that management was less than truthful in explaining them. The resignation letter of Jacky also indicates he learned of something in the days just prior to resignation and he was not comfortable with the response of Cheng. The resignation of Dong also referred to irregularities including some subsidiary banking irregularities and that management did not embrace the recommendations to address them.

It's clear there is an issue that is likely material. What it is and how it impacts the financials is unclear. A forensic audit that is independently driven by someone other than Cheng is clearly required. Based upon these few data points, it leads us to believe that Cheng may very well be the issue and Jacky resigned when he felt he no longer could trust him. Obviously speculation on my part and there are probably other explanations, but none that appear as likely to me.