China Limits Access to Filings

Getting company documents becomes more difficult after short sellers used them to highlight accounting discrepancies.

China has begun limiting access to corporate filings after short-sellers used them to highlight accounting discrepancies that led to stock plunges and regulatory investigations over domestic companies listed abroad.

“In recent months, the Industry & Commerce Administrations in many key cities and provinces around China have implemented measures restricting access to the AIC files of Chinese companies,” said Nathan Bush, a Beijing-based partner at the law firm O’Melveny & Myers LLP.

‘Fraudulent Scheme’

In June 2011, Muddy Waters accused Sino-Forest Corp. of overstating its assets, triggering a 74 percent drop in its share price on the Toronto Stock Exchange and wiping out about C$3.3 billion ($3.2 billion) of market value by the time shares were suspended from trading in August. Canadian regulators say five of its executives engaged in a “complex fraudulent scheme” that misled investors.

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