Friday, November 8, 2013

Blog Commenter On His Experience Trading China MediaExpress Holdings

He owned puts on CCME when it halted:

I had a half-dozen phone calls back and forth as expiration loomed, speaking to a junior and then not so junior person at my brokerage. I basically pulled up the OCC language on expiration of options in suspended stock. Can't recall quite what it said, but basically that you can exercise provisionally (I think there's some leeway for the broker to refuse, but I didn't highlight this).

Since I was exercising and had no underlying, I then had to borrow the stock, which was the broker's main issue, but they found some and I paid whatever the last borrow cost was until it traded again--around 5 weeks later, as I recall (the suspension lasted for a few months, I think). I bought to cover on the first day it traded again on the Pinks; there wasn't much of a squeeze, maybe because the stock seemed worthless, and I wanted to put the whole chapter behind me and book the gain.

It really wasn't difficult; maybe a half hour of work. But still nerve wracking when the initial response is, "Oh, sorry, you'll have to eat that twelvefold gain because we don't feel like looking something up."
Good to know. The SEC recently sued CCME.


Anonymous said...

Note that this has happened in very few China-based reverse merger and fraud cases in which the SEC suspended shares.

There is a rather smooth handover from NYSE to an OTC market in most cases.

Take JAG to JAGGF for instance: .

eah said...

I'd like to hear about an instance -- any instance -- where the SEC (a mostly useless organization) suing a crooked Chinese company (is there any other kind?) has gotten anything significant back for investors. Otherwise I'll continue to believe that it's just throwing good taxpayer money after bad investor money.

Aharon said...

Glad to see my words graduate, however briefly, from the comments section.

Oh, for the innocent days when CV Starr would buy in size into a fraud and then, hand to forehead, sue the auditors.

Fraud and poor financial engineering (a continuum?) are a wonderful playground; if only it weren't for all the false positives...

Anonymous said...

@eah, I have yet to see evidence of fraud in Suntech's case. Perhaps the company did knowingly provide shareholders with false information. If you want to put a case together, feel free to send it to the SEC and save taxpayer money.

China takes securities fraud much more seriously than the USA. You should have more respect for the Chinese (even if you have reason to believe Chinese companies are crooks). Please read this and keep in mind that managers accused of fraud are often arrested, held, guilty until proven innocent, and can be sentenced to death if found guilty by a court: .

Anonymous said...

This is why people commit fraud in the US but not China: .

In the USA, you get a get out of jail free card bail out.

Also, fraudsters like Jeffrey Skilling get 50% off their prison term.

Anonymous said...

China certainly does take securities fraud more seriously than the USA. Clearly, you're Chinese-American who was causal in having one of the following articles to be written:

Given your knowledge of securities fraud enforcement in China, you sure as sh!t better be thankful you're in 'Merica, lest you be caned and held in a dungeon eating only duck sauce and rice pending execution.

Century of Humiliation said...

"China takes securities fraud much more seriously than the USA."

That's hysterical. It must just be our lying eyes that saw the epidemic of Chinese reverse merger frauds on U.S. exchanges.

There were so many Chinese frauds with fake cash balances that net-net screens had to be reprogrammed!

Anonymous said...

All of the fraud cases you cited were Chinese companies that committed fraud in the USA (by knowingly providing false information to investors in US securities), not in China (to investors in Chinese securities).

There have been very few Chinese companies that commit fraud in China since companies need to be profitable--not Twitter birds-- to list and also because those who commit fraud get killed.

I would rather be a fraudster in the US and eat well in a minimum security jail for a few years, than be a fraudsters in China and not eat in a dungeon before getting shot.

Opium War said...

So China may care about Chinese securities fraud that affects Chinese institutions, but not about Chinese fraud that affects U.S. investors?