Here are a few more words:
"While the settlement purports to impose a number of corporate governance reforms on Nominal Defendant ABAT (the "Company"), it is deliberately structured so that Nominal Defendant - which, as a registered company, is required by law to file reports with the Securities and Exchange Commission ("SEC") - can be in full compliance with the settlement without bringing itself into compliance with United States law. I cannot give judicial imprimatur to any settlement of this derivative action that does not require ABAT to bring its years of unfiled financial reports current, and to make future filings for as long as it is legally required to do so... The motion is, therefore, denied... Because the settlement is not approved, the collateral motion for approval of an award of attorney's fees and costs is denied, as is the payment of any incentive fee to Mr. Braun."
That, of course, comes from the Hon. Colleen McMahon in her opinion denying settlement in the derivative action following the fairness hearing in February. ABAT has missed two more filing deadlines since. I don't see any evidence of a good-faith effort on the company's part to remedy the situation. That doesn't exactly scream "buy" to me; how about you?
Actually, Fritz, ibn8tn may be onto something, here; perhaps it IS necessary to go to China to learn what's going on with CBAK, and we can't place any reliance on their SEC filings.
They have, after all, reported quarter after quarter, year after year, of losses, and now they have evidently lost the vast majority of their production facilities due to defaults on debts. It requires a suspension of disbelief to accept the notion that a management cadre is that inept, that the company could really be THAT bad, and still be operating.
This validates a thesis I have long held-that CBAK's management is engaged in a nefarious scheme to deceive Western investors into thinking that the company is a dismal money pit, when in reality it is earning unbelievable profits that management is hoarding for themselves.
Very clever, these Chinese.
As them old saying goes, "actions speak louder than words", and I think Mr. Seiden has done a commendable job thus far. The corollary to that might be, "Cash speaks louder still". When you and the other SCEI investors are made whole (or, at least, satisfied with the cash distributed to you as a result of Mr. Seiden's efforts) I'll be the first to congratulate you.
I'm fairly confident, however, that Mr. Seiden isn't doing all this work out of the goodness of his heart, and I'm sure the same is true of the several firms he has brought on board to assist him. I'll be interested to see the final tally for all that.
As to the press release itself, I suspect that it's merely a bit of self-promotion on Mr. Seiden's part (recall that he issued two or three similar releases relative to the ZST Digital Networks matter). If it is, as others have suggested, an effort to kite the share price, I doubt it will prove to be very effective.
As an aside, I note that Mr. Seiden has also been appointed as receiver in the matter of Yinlips Technologies, another case in the Delaware Court of Chancery. Shares of Yinlips were, I believe, issued in a strictly private placement, so it hasn't had the public exposure that ZSTN and SCEI have had, and I have no idea what progress he's made in that case.
Yes, ZSTN, SCEI, and now CELM. It would appear that Messrs. Graff and Seiden have the makings of a little cottage industry here, trying to pry investors' money from these PRC operating subsidiaries. Mr. Seiden evidently has done yeoman's work so far in gaining operational control of these companies' various non-PRC shells, but I've yet to see any indication that a net positive cash return has materialized for the aggrieved investors.
Found an interesting piece on Bloomberg News dated Thursday last.
Using the following as a search parameter:
"How to Make 43% Profit in China With No Idea What You Bought"
should get you to the article.
A couple of highlights:
"The perception that IPOs are riskless has encouraged some investors to use borrowed money, exposing them to deeper losses once prices stop climbing, according to Lin Jin, a senior analyst at Shenyin & Wanguo Securities Co. in Shanghai.
China’s benchmark money-market rate rose the most in three weeks on July 23 as orders for five IPOs spurred an increase in demand for borrowed funds. The central bank said yesterday that the deals helped fuel a record drop in local-currency bank deposits last month as customers shifted funds to their brokerage accounts."
Sounds reminiscent of the climate in the U.S. circa late-1920's.
"Investors’ rush into Chinese IPOs, which have rallied an average 94 percent from their issue price this year, or seven times more than the global average, contrasts with lackluster demand among local investors to participate in the broader stock market. Traders have liquidated about 1.3 million mainland equity accounts since the end of March, leaving the number of funded accounts at a four-year low of 52.55 million."
I don't know how many of you here follow the FTSE-Xinhua "China 25" index, but I heard of a change today (via iShares) that is worth noting.
As the name implies, the index as currently constituted tracks 25 selected stocks that trade both as "A" shares in the mainland PRC and as "H" shares in Hong Kong. A particular criticism of the index has been that it lacks diversity, and is especially skewed toward the financials sector (currently 15 of the 25 component equities are financials).
According to iShares, the index is to be reconstituted in September, and will track 50 equities as of 19 September. Hopefully, the new index will be broader.
Well, the beer's cold, and I'm off. Y'all have a fine week-end.
The SEC today issued another scheduling extension order in the above-styled matter, pushing the earliest brief filings back another 45 days, to 3 November 2014 (see Release 72845). All parties, including the SEC's Enforcement Division, had requested the further extension.
While this would delay the conclusion of the SEC case until sometime next year, the language of the extension request implies that settlement discussions are ongoing, offering at least the possibility that some resolution apart from proceeding with the litigation may be achieved, rendering the filing schedule moot.
The SEC today revoked the registration of China Electric Motor (CELM), together with another PRC-domiciled issuer, Westergaard (WSYS).
Neither was particularly remarkable, except that there are STILL posters on the CELM board who seemingly think they'll be saved by a buyout. Optimism is a fine thing, but when the last train is long gone, and they've pulled up the tracks and ties, there's not utility in hanging around the depot hoping for a ride.
Highpower International (HPJ) reports 2Q earnings Wednesday next. Should offer us a glimpse into the state of the battery business in China.
Haven't heard so far when CBAK is due to report.
Kidding aside, the only thing I've seen lately that's remotely related (and remote is the word) was a ruling two days ago from the ALJ in the BDO China Dahua CPA Co. et al, case permitting the filing of an amicus brief in the case by a local Chinese trade group. If you read the decision (Release 34-72753), it's far from clear that the panel will actually consider the brief when forming its opinion, but the admission of the brief at all, in the ciscumstances, is worthy of remark.
The SEC today issued the final order revoking the registration of China Digital Animation Development, Inc. (CHDA). See SEC release 72745 (Item 34-74725 on the web page), dated 4 August 2014.
CHDA, of course, was headed by Foo Qiang, and at one time shared offices with ABAT. According to the filing, CHDA did not petition to defer or reverse the revocation.
Well, if you're going to insist on playing around in the manure pile, you need to develop a tolerance for the flies.
Don't know about the lawsuit.
As to the SEC proceeding, on the other hand-
My count is that 142 issuers have both been served with an OIP and revoked since 1 January of this year (note that this doesn't count revocations in which the OIP was issued prior to 1 JAN 2014). The average turnaround time from OIP issuance to revocation is 62 days, within a range of 0 to 154 days. A substantial number are clustered in the 62- to 67-day area.
Based on those numbers, I'd expect that no word may be forthcoming until somewhere around 25 August, and even then it may be limited to announcements of revocations of other firms receiving an OIP on the same day as CBEH.
Is the 6 year China bear market ending?
by ibn8n • Feb 9, 2014 8:59 PM
Is it over? Time for a turn around?
This Co. [CSGH] is in China it does business in China it just happens to be listed in America. It follows the Shanghai market not the DOW. If the Shanghai market breaks the bear market followed by an agreement in auditing hold on tight.
Chinese bear market
by ibn8n • Apr 8, 2014 9:28 AM
looks to be ending. Stocks in markets that have declined for years typically explode to the up side when the index breaks the downtrend. China has been in a bear market for 6 years.
Shanghai index up 39.45 last night to 2,098.
if I ever decide to pump a stock, the first thing I'll do is hire Bill Ackman to do a three or four hour seminar to tell everyone how terrible it is. Seems to have done wonders for Herbalife.
Good to see you're still kickin'. I trust you and yours are well.
I can't speak to Fidelity's policies. I do recall, though, that Scottrade issued similar restrictions on individual securities several years ago (notably back in the 2009-2011 time frame). They went so far as to publish a list of "sell only" securities, in addition to their usual listing of securities with increased margin maintenance requirements.
I haven't seen any "sell only" restrictions from them lately, though, and suspect they may have elected instead to adopt some broader policies aimed at steering clients away from this particular segment of the equities market. For example, they now consider any stock with a PPS less than $1.00 to be unmarginable (100% maintenance required in all cases). One consequence of that policy is a prohibition on adding to a short position once a stock goes below a buck. Can't open a short position on stocks under $3.00.
Obviously no cause for alarm here. A 16% drop on 7 times ordinary volume is merely a healthy correction for a NASDAQ-listed stock.
I'd stake my MBA on that. Got it from Port Royal University, Bobby McFerrin College of Economic Theory and Bar Tending Academy. Bring on another Mai Tai; don't worry, be happy!
As I recall, the majority of the eight listed went from Stipulation to Fairness hearing within 20-30 days. ABAT took months, but I'm assuming that, now the settlement has the court's approval, the timetable will be close to theothers.
The above-styled action (which, for convenience, I'll just call "Thumb" henceforth) was evidently decided in the PRC's Supreme People's Court on 11 June 2014.
Such English--language documentation as I've been able to find regarding the matter is woefully lacking in detail, but as I currently understand the matter:
"Thumb" is a VIE operated by the defendant "Sino", an offshore (Singaporean) holding company. Thumb had sued Sino in the Fijian People's Court over prior capitalization commitments, whereas Sino had exercised what it believed to be its authority to replace the Thumb management and withdraw the suit.
The local court had ruled in favor of Thumb (thereby effectively voiding the VIE contract). The Supreme Court reversed this, ruling that the offshore holding company's rights under the VIE were, in fact, enforceable under PRC law.
Now, as I said earlier, I'm not satisfied with the detail I have right now, but it certainly merits some further inquiry. If it proves correct, it MAY add a margin of safety for offshore holders of these VIE's.