Morgan Stanley pushed murky China stock to market
Source: AP-EXCITE
By JEFF HORWITZ
WASHINGTON (AP) — The Associated Press discovered significant discrepancies between financial records and what a Chinese company backed by U.S. banking giant Morgan Stanley reported as part of its $654 million stock offering. Issues of murky financial information and lax oversight have become increasingly important as U.S. mutual funds and pension funds invest more regularly in Chinese companies.
The disarray in Tianhe's official story calls into question Morgan Stanley's roles in shepherding, then promoting, then defending Tianhe — which one of the bank's investment funds partially owns — as a major international stock offering in Hong Kong. For the bank and fellow Tianhe underwriters Bank of America Merrill Lynch and UBS AG, trouble at Tianhe could mean reputational and legal trouble.
For U.S. investors, the story of Tianhe (pronounced TYEN'-huh) highlights the unusual risks that can come with China's rapidly opening markets. As investment banks bring new mainland Chinese stock offerings to market, billions of dollars of such holdings are entering of U.S. investors' portfolios through pension and mutual funds.
"Accounting fraud in the U.S. is usually from the overly aggressive application of an accounting principle," said Paul Gillis, a professor at Peking University's Guanghua School of Management. "Accounting fraud in China has usually been situations where large portions of the business simply do not exist."
FULL story at link.
In this photo taken Oct. 24, 2014, Tianhe Chief Executive Wei Xuan shows journalists a sample of one of the specialty chemicals the company manufactures at its 800,000 square meter Jinzhou plant in China. The pitch to investors described the company on the verge of spectacular success. Tianhe Chemicals Group Ltd. boasted rock-bottom labor costs, unique manufacturing techniques and net profit margins triple those of competitors. (AP Photo/Erika Kinetz)
Read more: http://apnews.excite.com/article/20141113/us--china_stock_controversy-a913806af7.html
Let Senator Warren there there a new one WITH JAIL TIME! That is the only thing that will stop them.
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