Why Did Xinhua Finance Media's Singhal Suddenly Resign?

Xinhua Finance Media Limited (XFML) announced late Friday evening "Mr. Shelly Singhal has resigned from the Boards of both companies, as well as from all executive and managerial positions. His departure is immediate."

I still remain in the dark about the true reason behind Singhal's resignation. Looking back, I suspect some people already knew that news back on Wednesday, as there was a large number of shares unloaded midday. By Thursday and again Friday, large sellers were apparent. And the stock price dropped by almost 20% over those three days, wiping out all the gain from the reaction to the good quarter. However, there was no news or rumor reported in the media. The company has been very unresponsive.

Now looking forward, whether the harsh reaction is deserved is a question. The conclusion has to do with why the guy left so suddenly. He was not a CFO anymore and he still held a substantial percentage of shares in the company. Would anyone care to shed some light?

Disclosure: Author has a long position in XFML

XFML 3-mo chart

Comments

[Totally a b...:]

Hey, I was right on about that guy when the company IPOed... Here is what I wrote about him and XFML on Mar 12th...

china.seekingalpha.com...

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"This company is full of crap, a holding company of the parent Xinhua which is again a holding company of some other print company. The CFO of the company is a founder and CEO of his own company SBI something and is also a licensed broker in the US. What is he doing at XFML ? Plus he looks very shrewed, cunning and fishy. As if he is in only for the money. Possibly hired for his English speaking skills just to get the IPO done.

This company looks a lot like NINE where there were so many inter-relations of the CEO with other companies he founded. That fked up stock (NINE) priced at $12 opened at $13 in 2004 and is now trading at $4 something.

And finally remember this equation: Chinese IPO => JP Morgan/Credit Suisse = CRAP, POS, RUN !!!"

2007 May 21 03:46 PM

[penggao10:]

I try to shed some light based on ny research and analysis via internet. XFML is made of all bunch of stations, websites, magzines, Ads agencies that most of chinese have never heard of it. Ms. Bush spend a little money, along with finance assistacce from Singhal who had no credit in Wall Street, to make up the shell of XFML company by contracting with numerous non-profitoble stations in China virtually without audiences, valuable contents. With IPO proceeds, she then starts to acquire some others with profit to make up good-looking financial report and rapidaly grow XFML in Finance industries. She worked with Singhal to creatively name XFML company as new era of Wall Street in China to cheat those underwriters for IPOs with a name of Xinhua borrowed from Xinhua agencies though some undertable deals.The departure of Singhal is to prtect him from a accounting scandal activities during IPOs and protect his initial investment from XFML. As XFML is farely new to chinese and world, there is indeed opportunity for her to grow by allinging with other outsiters, but a risk of that is whether or not the situation could lead to a accounting fraud. My recommendation is to leave and watch until second quarters. There is more red flags than a departure of Singhal behind whole stories and more surprsing development will occurs. Sell and leave a small share for a short.
Patrick

2007 May 26 08:56 PM