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Removing Chinese companies from the NYSE...probably a good idea

 I was first introduced to Chinese companies listing on the Canadian stock exchange about a decade ago when my then boss asked that I pitch to Chinese companies to list on the TSE.  To say that I was dubious would be an understatement and further proved that many of my then colleagues didn't take their fiduciary duties very responably.  

The first thing you need to know is that there is no such thing as audited financial statements in China.  The concept of "verification and certification" simply doesn't exist.

Case and point: Sinoforest was covered by all the big Canadian brokers, who all certified that they visited the company in China and saw their sawmills and everything.  

First lie:  They visited the head office...actually the image on the annual report (and the address in the annual report) is placed at which Sinoforest never even had operations.  So these analysts failed the first test; take the annual report, look at the last page, and visit the headquarter.  My guess is that these guys had a lovely time gambling in Macau and never set foot near any operations of Sinoforest -- they probably got presentation nice videos lots of booze and hookers and maybe a little golf, but they never really looked at the company -- as was later demonstrated the company was a shell there was nothing there!

Granted that audited financial statements still allow many lies and the latest trick by North American companies to "restate their earnings" to better show the performance of the company is one of the latest tricks that has been deployed, but in China (like in Turkey in the late 1980s) audited statements simply didn't exist!

That means that management accounts is all that you have; I am reasonably certain that when it started Sinoforest was an honest company but over a few short years the need/desire to lie expanded exponentially, and by the end there was no value left in Sinoforest -- interesting side note the CEO and COO were never arrested (or found) the CFO (a Canadian did paid $700,000 in fines and walked away).  Which is another thing, since Mit Romeny was so keen that "Corporations were people too" then why didn't the CFO serve jail time...curious but consistent with the non-prosecution of boardroom malfeasance over the past 15 years.

So I agree with Trump companies that cannot produce audited financial statements have no business being listed on North American stock exchanges.

A first step

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