OK, then list 15 companies that are "probably legitimate" ;-)
We will define "probably legitimate" to mean that net income is probably within 25% of what it would be if the companies were "accounted" in a way consistent with the integrity and corporate governance standards of a highly regarded U.S. blue chip such as Procter and Gamble or Exxon Mobil.
Good luck ;-) And don't ask me to produce a list of 285 frauds. I'll just take my CGS tracker, copy and paste it, and pull off YONG, ADY, SYUT, CSR, FTLK. Maybe CAAS. Maybe CFSG. Maybe also OSN (the SEC filings are probably off, but likely to be within 25% of reality), maybe LZEN (better chances than OSN of being legit IMO, but they want to raise money), and probably CCCL just to make you happy, even though I'm hardly confident in that name. Done. Everything else (give or take a few) is a fraud.
Really, Fernando, it comes down to basic common sense. If a company with a healthy balance sheet, positive net income, and double digit growth comes to the U.S. in a junky reverse merger and sells shares at 3 or 4 times earnings to a bunch of Americans at the same time (2004-2008) that other Chinese companies are going public here at 100 times earnings, then obviously something is drastically wrong somewhere. This smell test has been put to the test time and time again over the last 9 months, and it's been proven reliable every time. It's saved me from losses that would have amounted to about 50% of my portfolio. I'm going to stick with it.
The smell test is violated everywhere in these stocks. Funky looking SEC financial statements, mismatching chinese filings with stupid, incoherent excuses given, perpetual auditor shuffle, huge A/R's, inventory turns that make absolutely no sense, frequent dilution that forces you to scratch your head every time, companies paying debt at huge interest rates while their alleged "cash" balances sit and collect dust, no acquisitions, no buyouts, no arbitrage, no dividends, halts, halts, halts, all fluff, all talk (HRBN, remember our earlier discussions on the acquisition? ;-)), no action.
It's not a coincidence. Even famous Chinese investors have warned of what is taking place here. There is a HUGE scam going on. Granted, it initially seems weird to think that there could be so many frauds all coming from one place. But that's only because we aren't Chinese, we don't live in that society, we haven't been immersed in the culture, and we aren't familiar with the shady characters and networks that have helped to put the scam in motion. But it's a scam, no doubt about that.
These companies don't come here to give us value on the cheap. They are much smarter than that. Give them more credit. They don't appear to make "stupid" mistakes because they are stupid. They appear to make "stupid" mistakes because we are stupid and we think they are mistakes. They are not.
If you want to argue that people should use real money (not monopoly money... real money) to challenge the smell test, the burden of proof is on you. And I guarantee you that you will not be able to give good arguments for the claim that many more than 15 companies in this space are legit. So my 95% number is actually quite realistic.
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