The Chinese are committing fraud in US capital markets’: Muddy Waters’ Carson Block


The Chinese, already facing heat from American officials over coronavirus disclosures among other issues, may have a new battle to fight on Wall Street over their domestic companies listed on U.S. stock exchanges.

Carson Block, Founder and Chief Investment Officer of Muddy Waters Capital, is among a group of investors blasting the Chinese for repeated bad form that he believes is harming Main Street investors.

“Chinese-based issuers have committed – and continue to commit – fraud on a stunning scale in the United States’ capital markets,” wrote Block in a comment letter to the Securities and Exchange Commission exclusively obtained by FOX Business ahead of a Thursday ‘Emerging Markets Roundtable’ hosted by the SEC.

TRUMP GETS TOUGH ON CHINESE STOCKS IN CORONAVIRUS STANDOFF WITH BEIJING

CLICK HERE TO READ MORE ON FOX BUSINESS

The letter, which will be shared publically on the SEC’s site with others, also states, “Protecting individual investors from the devastating financial impact of these frauds requires a profoundly different policy and regulatory approach.”

Block cites the “implosion at Luckin Coffee in April of this year.” The so-called “Starbucks of China” admitted that at least $310 million of its sales over the previous three quarters had been exaggerated. Earlier this month, Chairman Charles Lu was removed at a special shareholders’ meeting in Beijing along with three other directors. But Lu is Luckin’s largest investor so his influence remains of concern to regulators here and in China.

There have been “no auditor resignations of note” Block points out. Luckin was delisted from the Nasdaq last month.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Even with the Luckin implode, the Nasdaq, which notes it has over 3,100 listings from both mature and developing markets, argues it is taking steps, as recently as May, to close some of these loopholes.

“While Nasdaq’s role is not to regulate or inspect auditors, in light of the limitations placed on the PCAOB [Public Company Oversight Board] and other regulators, we believed that it was incumbent upon us to have a role in qualitatively assessing these accounting firms and proposed rule changes to strengthen investor protection. The Nasdaq rule changes that we proposed to the SEC on May 18, 2020, aim to enhance listing standards applicable to companies whose business is principally administered in a Restrictive Market. These proposed rule changes also address auditor and management qualifications,” wrote John Zecca, Chief Legal and Regulatory Officer, Nasdaq, in his letter to the SEC reviewed by FOX Business.

Secretary of State Mike Pompeo, in June, praised Nasdaq for taking the lead on tightening up regulatory practices.

“As part of this ongoing effort, I applaud Nasdaq for requiring auditing firms to ensure all listed companies comply with international reporting and inspection standards. Nasdaq’s announcement is particularly important given a pattern of fraudulent accounting practices in China-based companies” said Pompeo in a press release.

US COULD BAN TIKTOK: SEC. MIKE POMPEO

This week Pompeo continued to warn the Chinese over consequences for bad behavior, threatening a possible ban of select social media including TikTok.

The roundtable is sure to provide some fireworks as pressure mounts on the Chinese.

SEC Chairman Jay Clayton, who will preside over the meeting, in his statement acknowledges the rapid expansion of emerging market companies, “including China” into U.S. capital markets. “This is a fundamental issue in emerging market investing that I believe investors, particularly our Main Street investors, should better understand.”

On Thursday, representatives from the New York Stock Exchange, the Department of Justice, Starbucks and the PCAOB, among others, will participate in the SEC’s roundtable.

Related Articles



Source link

it’s your Friday good news — Ask a Manager
Mental health concerns at SMEs have surged during the pandemic
Best Shampoo for Straight Hair
lunch meetings when I can’t eat, I’ve fired my new employee before, and more — Ask a Manager
Cubicle Cowboy – Rawhide and Uncut.
💖6 DIY DOLLAR TREE FRENCH CHIC DECOR CRAFTS /GLAM/ BRIDAL 💖 Olivia's Romantic Home DIYS
#223 – Architect John Lum on His Design Process and Work
How to box in pipes Pipe box in with MDF PLYWOOD PLASTERBOARD drywall
Covid-19 pandemic highlights need for collaboration: HUL CMD Sanjiv Mehta
Chamath-Backed Clover Health in Apparent Squeeze with Massive Short Interest Reminiscent of GameStop
Childcare providers get a much-needed bailout
Hong Kong’s Jimmy Lai faces 12 months in prison for unlawful assembly
Compelling Concepts Balancing Business and the Environment
5 Questions for Katherine Lin: Data Scientist in Training
Future of the Business World: Two Innovators Take Us Inside the Entrepreneurship Journey
Fintech Megatrends Transform Our Relationship with Money
BATANG KUMAKAIN NG BUHAY NA UOD NAG VIRAL ANG VIDEO
Quiet Office Space Design Solutions | Emagispace
Best of the Running Jokes from The Office, Parks & Recreation and Brooklyn Nine-Nine | Comedy Bites
La karibeña – dilbert aguilar – agonia de amor – hd