Stock markets in China grow governance teeth 5 Aug 2020 The Supreme Court will allow class-action lawsuits similar to those that won big settlements for Enron and WorldCom shareholders. Liberalisations have unleashed massive rallies on domestic bourses, and restraint on executive abuse is overdue. China Inc had better lawyer up.
Wirecard’s red flags offer lessons for investors 20 Jul 2020 Shareholders couldn’t have known that $2 bln of the payments group’s cash was missing. But its seemingly unnecessary reliance on debt finance raised questions. A weak board and short-term executive pay packages were further warning signs. All three serve as a teachable moment.
Tencent’s hot sauce fraud exposes expired tech 3 Jul 2020 The Chinese video-games titan appears to have been taken by crooks pretending to work for Lao Gan Ma, a popular spicy condiment, using a forged company seal to ink an advertising deal. Such old-fashioned methods have embroiled others including SoftBank. Digitisation is overdue.
BaFin’s rejuvenation starts with finding new boss 2 Jul 2020 The German regulator investigated journalists and investors rather than fraudulent Wirecard. Beefing up oversight of payments and auditing will have little impact if the watchdog doesn’t properly use its powers. Change is unlikely while President Felix Hufeld remains in charge.
Hadas: Wirecard woes show need for fraud-busters 1 Jul 2020 Accountants EY may have been particularly inept in missing fraudulent bank balances at the German payments processor, but auditors are normally right to presume companies are fairly honest. Sniffing out cheating is a job for separate, licensed and powerful forensic specialists.
Wirecard UK saga exposes payments regulation holes 1 Jul 2020 Clients of the collapsed group’s British arm had their accounts frozen while the watchdog tried to pin down its cash balances. That hurt blameless retail customers. Supervisors urgently need a way to monitor payments firms more closely before they get into trouble.
Wirecard is argument for a Big Four pay clawback 30 Jun 2020 Audit giant EY is embroiled in the German scandal after signing off accounts when $2 bln was missing. Remedies like splitting bookkeeping from consulting or using two auditors may focus minds on finding frauds. But until pay is linked to clean accounts, scandals will continue.
Wirecard collapse is real-life fintech stress test 25 Jun 2020 The German group is filing for insolvency a week after saying $2 bln of cash was missing. Its collapse will test whether fast-growing and lightly regulated payments firms can fail without damaging customers or other lenders. The fallout has consequences for the entire sector.
Wirecard’s bankers might as well keep it alive 22 Jun 2020 ABN Amro, Commerzbank and others could tip the payments group into insolvency by calling in 2 bln euros of loans. Given Wirecard’s lack of cash and tangible assets, they might not get their money back. Better to see if new CEO James Freis can salvage something from the wreckage.
Wirecard could prove a nail in BaFin’s coffin 22 Jun 2020 Despite repeated allegations of fraud at the payments group, the German watchdog until recently focused on short-sellers and journalists. The scandal poses big questions about its oversight of Wirecard’s bank unit - and about financial regulation in Europe’s largest economy.
Wirecard scandal turns into an existential crisis 18 Jun 2020 Markus Braun’s payments group lost over half of its market value after EY found indications that 1.9 bln euros of cash balances might be “spurious”. Loan covenants may be triggered, threatening its access to finance. Regulators, lenders and auditors have lots of explaining to do.
Wirecard CEO is approaching his day of reckoning 16 Jun 2020 The $14 bln payments group is due to publish its delayed 2019 annual results on Thursday. If EY flags issues with its accounts, Markus Braun’s position will be untenable. Even the auditor’s seal of approval may not save the chief executive from investors who want him out.
Samsung’s M&A controversy will have a final act 9 Jun 2020 Seoul is stepping up a probe into a 2015 group merger led by scion Jay Y. Lee. That might help U.S. fund Elliott which opposed the $8 bln deal and wants payback. Samsung went to great lengths to only narrowly win the first time around. Pressure on the conglomerate is building.
Chinese online tutor gets lesson in multiplication 29 May 2020 GSX Techedu deflected one sloppy short-seller attack and a second sensational one. A third from Muddy Waters calling the $7 bln company a fraud hit as Luckin buckled and Congress moved on U.S.-listed Chinese stocks. Growing scepticism will require targets to have strong defences.
Luckin spill will get China coffee war brewing 25 May 2020 The reeling chain once worth $12 bln is getting booted off the Nasdaq for fraud. Its brand might be toxic, but it has assets and ideas that Yum China, Tim Hortons and HeyTea could buy or adapt. Such deep-pocketed competitors may present a more formidable challenge to Starbucks.
Corona Capital: U.S. GDP, Gilead’s drug, Spotify 29 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: the U.S. economy takes a dive; Gilead’s antiviral drug may help a bit; and Spotify sings an upbeat tune.
China’s tough Luckin line faces deaf U.S. ears 29 Apr 2020 Authorities raided the embattled coffee chain’s office, partly to limit collateral damage from the accounting scandal. Beijing also may be trying to placate impatient U.S. regulators. It will take far more, though, to satisfy hawks demanding China Inc delistings and divestments.
Corona Capital: Trouble in the Levant 28 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: Protests erupted in Lebanon as its Covid-19 lockdown worsens the country’s economic problems. It may be a harbinger of broader virus-related discontent.
Singapore oil trading mess creates a long slick 20 Apr 2020 The founder of Hin Leong Trading, O.K. Lim, fessed up to hiding $800 million in losses. That’s bad for auditors and the banks holding $3.9 bln of related debt. It’s also tricky for the city-state’s status as an energy hub, and perceptions of privately held commodities firms.
Wall Street stuck with Luckin Coffee dregs 7 Apr 2020 Morgan Stanley, Credit Suisse and others face big losses after the founder of Starbucks' Chinese rival defaulted on $518 mln of loans amid fraud charges. The lenders are stuck offloading a huge stack of share collateral in a falling market. It’s the price of blindly chasing fees.