The Audacity of Chinese Frauds. The NY Times reports: To pull off a fraud that humiliates the cream of the global financial elite, you need to have some friends. And where better to have them than at the local bank?
The fraud at Longtop Financial Technologies, a Chinese financial software company, was exposed this week in an amazing letter from its auditors, Deloitte Touche Tohmatsu. It appears to be a tale of corrupt bankers and their threats to auditors who had learned of the lies.
I must add that the corrupt bankers at issue are Chinese bankers. While we know that American bankers are criminal assholes, in this situation they may simply have been incompetent. The article continues: Longtop did not go public through a reverse merger. Its initial public offering, in 2007, was underwritten by Goldman Sachs and Deutsche Bank. Morgan Stanley was a lead manager in a 2009 offering of more shares. Major owners of the stock included hedge funds run by people known as “tiger cubs” because they got their start at Julian Robertson’s Tiger Fund.
On May 4, only a couple of weeks before the fateful struggle at Longtop offices, an analyst for Morgan Stanley, Carol Wang, wrote:
“Longtop’s stock price has been very volatile in recent days amid fraud allegations that management has denied. Our analysis of margins and cash flow gives us confidence in its accounting methods. We believe market misconceptions provide a good entry point for long-term investors.”
Why does anyone believe a thing these "analysts" report? Remember when Jim fucking Cramer was telling people that Bear Sterns was perfectly fine a couple of weeks before they imploded? Yeah, lying bullshit artists, every single one.
Thanks to John for the link.