Ethical Issues Cast Shadows on Xinhua Finance - Barron's
Ignoring an Inconvenient Truth by Bill Alpert
Summary: CEO Freddy Bush was named Asian Business Media's entrepreneur of the year in October for building up Xinhua Finance Media Limited [ADR] (XFML). The company provides financial news, stock indexes and ratings for the Chinese markets. A March U.S. IPO raised $300 million, which may have helped it buy "hard-hitting proxy advisory firm" Glass Lewis. But last week Glass Lewis's head of research and its managing director resigned after learning that Xinhua's IPO prospectus did not mention some salient facts about the company's then CFO/investment banker Shelly Singhal. Singhal is being tried in California civil court for racketeering, and has been a major investor in two companies (AremisSoft and ACLN) which were eventually exposed as "outrageous frauds." In his letter of resignation, managing director Jonathan Weil said: "I am uncomfortable with and deeply disturbed by the conduct, background and activities of our new parent company Xinhua Finance Ltd., its senior management, and its directors. To protect my reputation, I no longer can be associated with Glass Lewis or Xinhua Finance." On Friday, the company put out a press release that Singhal was resigning from the company's board. Bush was full of praise for Singhal, but eventually admitted she had known about Singhal's NASD problems when assembling the company's prospectus, and had intentionally omitted the information on her lawyers' advice.
Related Links: Xinhua Finance Media Debut Drop and the Current IPO Climate • Xinhua Finance Media's Less Than Impressive IPO • Xinhua Finance Media: Why I Took a Chance on this Chinese IPO
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This article has 1 comment:
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 !!!"