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.
To this point, I have unequivocally identified 29 Chinese RTO's involved in c=shareholder class actions going back to 2006 (year suit was filed). On the basis of the Standford University's Class Action database, I'm sure this only represent about half or fewer of the total, but I haven't been able to collect enough about the remainder to satisfy myself that I can reasonably include them in my little study.
Of the 29 mentioned, I've found just 8 that have [proceeded through settlement stipulation to final order. They are as follow:
Ticker Sstip Final Order
RINO 04-09-12 12-19-12
SCEI 01-27-13 07-10-13
ONP 10-04-12 04-29-13
ZSTN 02-01-13 08-05-13
GURE 04-30-13 02-10-14
CEAI 10-03-12 03-11-13
HQSM 09-28-12 03-21-13
WATG 01-11-13 05-31-13
Note that "Sstip" indicates the date that the stipulation of settlement was filed.
As to your question regarding the time between settlement approval and payment-the last time (prior to this) I was involved with a company that was subject of a class action was back in the '80's (AT & T). That one was months (but it's been so long I can't remember just how many).
Assuming the settlement administrator is reasonably competent, though, I'd think they could have this (i.e., the class action settlement) finalized by December-January.
The derivative action, of course, is stil hanging out there,
EFP Rotenberg was appointed as ABAT's auditor in November of 2011, replacing Friedman. (See 8K filed 29 November 2011 regarding the results of the Annual General Meeting). From that point forward, Rotenberg became ABAT's auditor of record.
Considering that the SEC just effectively barred ABAT's last auditor of record (EFP Rotenberg LLP) from practicing in China, I'd imagine the delay just got exponentially longer.
Evidently the SEC has wound up its case against EFP Rotenberg LLP and Nicholas Bottini, CPA (see SEC Release 33-9608, issued today).
As to the Remedial Efforts for the Rotenberg firm, inter alia:
"C. Respondent Rotenberg shall not issue any audit report, accept any audit engagement, or play a substantial role in the preparation or furnishing of any audit report for any issuer or registrant, U.S. or foreign, that files with the Commission and (i) has headquarters or principal executive offices located in the PRC, or (ii) has a subsidiary or component in the PRC the assets, revenues, or expenses of which constitute 20% or more of the consolidated assets, revenues, or expenses (terms as defined by PCAOB Rules and Notes to PCAOB Rules) of the registrant or issuer. For purposes of determining 20% or more of the consolidated assets, revenues, or expenses, this determination should be made at the end of the issuer’s or registrant’s
most recently completed fiscal year."
This particular case arises from Universal Travel Group, but will obviously have wider implications for any Rotenberg client.
I came across a very instructive article in the Boston Bar Journal (online) from 7 January:
"Litigating an SEC Administrative Proceeding" by Luke T. Cadigan.
Here's Cadigan's brief CV from the article:
"Luke Cadigan is a partner in the Government Enforcement Group of K&L Gates LLP (Boston office). Prior to joining K&L Gates, Mr. Cadigan was an Assistant Director and a Senior Trial Counsel in the SEC’s Enforcement Division. During his nine years at the SEC, he successfully tried several matters, both in federal court and the SEC’s administrative forum."
I'm frankly surprised that the SEC didn't suspend them contemporaneously with the OIP, as has been their usual practice. As I noted previously, that action may have simply fallen between the stools, as it were.
I do wish you the best of fortune; I like to see everyone making money. Seems to me, though, that all--long or short--are at risk here now. If it's revoked, whatever short interest remains will be near impossible to cover. In fact, in that scenario, I'd argue that the "shorts" are probably at greater risk-they still have interest costs, whilst I'd have to suppose that even "longs" on margin would have long since been brought up to 100% margin maintenance via margin calls.
It's also instructive to take a look at the SEC's China-Biotics (CHBT) file. The CIK is 1270157; the revocation order was made final on 4 November 2013.
Prior to that, they had made a considerable effort to get their filings caught up, as can be seen in the EDGAR database.
By all means read the SEC release thoroughly; that's why I posted the reference.
Simultaneously, though, I'd suggest taking a look at this (which I originally posted back on 15 January on the ABAT board):
"Well, as the old saying goes, 'They (CBEH) ain't alive yet.'.
Back in November of 2013, the SEC handed down an opinion in the China Biotics appeal of their revocation; I mentioned it at the time, and again strongly encourage those interested in "dark" RTO's (Chinese or otherwise) to read it. The opinion can be found on the EDGAR search page under the "Enforcement" tab, in the "Opinions and Adjudicatory Orders" sections, fourth quarter of 2013. The specific document number is Release 34-70800.
The China Biotics opinion itself is probably of less interest than the accompanying citations of precedent case law. It is abundantly clear on that basis that subsequent filing of delinquent periodic reports does not cure the original violation. It is also clear that the SEC has broad discretion in enforcement action in such circumstances, including whether to take any action, or to hammer the offending firm into the ground.
I'm not predicting that this will happen to CBEH or any other particular firm; merely noting that once they're in a delinquency situation such as they are, the risk is always there."
Not forgetting, of course, the Form 10-K for the period ended 31 December 2013, which is now also delinquent, although not yet due at the time the 2011 10-K was filed.