Chinese Company’s Shares Suspended on Critical Report 

Trading in shares of Tianhe Chemicals, which raised about $650 million in a Hong Kong listing in June, was suspended on Tuesday morning after a report on a website affiliated with short-sellers described the company as “one of the largest stock market frauds ever conceived.”

Shares in Tianhe fell nearly 5 percent on Tuesday after publication of the report by Anonymous Analytics.

Anonymous Analytics says it seeks to expose fraud and corruption at public companies and has taken aim at Chinese businesses before. It said in a disclosure that it held no position in Tianhe’s shares but that readers should assume its affiliates had sold short Tianhe’s stock or debt “and therefore stand to gain substantially in the event that the price of the stock decreases.”

Before listing in Hong Kong in June, Tianhe became enmeshed in a bribery investigation into the hiring practices of Wall Street banks, after JPMorgan Chase removed itself from a potentially lucrative underwriting role in the company’s share sale.

“The S.A.I.C. filings show that at best, Tianhe is a relatively small company which generates only a fraction of the business it claims,” the Anonymous Analytics report said. “Given these discrepancies, Tianhe’s I.P.O. prospectus appears to contain some of the most fabricated financial statements we have ever encountered.”

“The original set was audited by a registered local auditing firm and shows that Tianhe is a fraud,” the report alleged. “A second set was audited by Deloitte and matches with Tianhe’s I.P.O. prospectus.”

 

Source: NYT

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