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John Paulson Loses Half A Billion In Under 24 Hours

Tyler Durden's picture


John Paulson's worst nightmare is on the verge of coming true. As reported yesterday, JP is a holder of 34.7 million shares of Sino-Forest, which was halted yesterday after Muddy Waters came out with a report exposing the company as a fraud, and by implication, all the sellside analysts covering the company with a buy rating, not to mention all the funds who had bought into it, as diligenceless monkeys who refuse to actually do their homework and merely follow the leader in the worst example of Wall Street groupthink. Well, yesterday groupthink became gangbang, after names as varied as JP, CapRe, Bessemer, Blackrock, John Hancock, Hartford, and many more learned they all may have been fooled by the biggest ponzi fraud since Madoff. And while the funds may pretend things are good courtesy of the continued freeze of TRE.TO on the Toronto Stock exchange, where it still has to issue an announcement despite promises it would do so before market open, its sister stock, SNOFF.PK continues to trade domestically. And it's a bloodbath. After opening at $18 yesterday, the stock just touched $2.45, generating a loss of over $500 million for John Paulson, who in addition is rumored to be very heavily long the company's bonds. It will be ironic if one Chinese fraud (despite our repeated warnings) ends up being the black swan that confirms that there is no such thing as a consistently good hedge fund, and it is all merely a function of one right trade, at the right time, executed with infinite  amounts of leverage (thank you CDS). In the meantime, we hope Muddy Waters is working a report exposing that biggest ponzi scheme of all: the US stock market.

Below is an example of how true research impacts a stock price, instead of merely idiots piling upon idiots.

And speaking of monkey, groupthink and idiots, here are those sellside "analysts" who up until yesterday had the company on a buy rating. We hope their resumes are up to date.

Update: Here is the company's response which was just filed. The gist of it is - the company does not admit it is a fraud, and says not to believe MW because they are short.

TORONTO, June 3, 2011 /PRNewswire/ - Sino-Forest Corporation (TSX: TRE) ("Sino-Forest" or the "Company"), a leading commercial forest plantation operator in China, today commented on the share price decline on June 2, 2011 as a result of the allegations made in a 'report' issued on a website by a short seller operating under the name Muddy Waters, LLC. The Company was not contacted by Muddy Waters for comment ahead of publication of its report.

The Board of Directors and management of Sino-Forest wish to state clearly that there is no material change in its business or inaccuracy contained in its corporate reports and filings that needs to be brought to the attention of the market. Further we recommend shareholders take extreme caution in responding to the Muddy Waters report.

As indicated in the report, Muddy Waters has a short position in the Company's shares and therefore stands to realize significant gains from a share price decline that it precipitated.  Muddy Waters expressly admits that it makes no representation as to the accuracy, timeliness, or completeness of any information contained in its report. Further, its website discloses no address or ownership information, nor the credentials of any of the authors of the 'report'. Neither the Ontario Securities Commission nor the Securities Exchange Commission website lists Muddy Waters or its author as being registered as an advisor. Nevertheless, due to the substantial impact that the report has had on the prices of the Company's securities and the reputation of the Company, the Board has appointed an independent committee consisting of three of the Company's independent directors, William Ardell (Chair), James Bowland and James Hyde.  All three of these directors are financially qualified professionals and two of the three are recent appointees to the Board. The independent committee's mandate is to thoroughly examine and review the allegations contained in Muddy Waters' report, and report back to the Board. The independent committee has appointed Osler Hoskin & Harcourt LLP as independent legal counsel and will retain the services of an independent accounting firm and such other independent advisors as it deems necessary to assist with its examination. During the course of the independent committee's examination, the Company will provide any updates as appropriate. Following conclusion of the report, the key findings of the independent committee will be released to shareholders.

Allen Chan, Chairman and CEO of Sino-Forest commented: "We are committed to a high level of corporate governance and stand by the integrity of our company, our 16-year operational track record and our financial statements.  Our company has continuously retained the services of internationally recognized law firms, auditors and expert consultants from Canada, the US, Hong Kong and mainland China."

"It is important that our independent committee thoroughly address Muddy Waters' allegations, and they will have my full support and those of the management team in doing so. However, let me say clearly that the allegations contained in this report are inaccurate and unfounded. Muddy Waters'
shock-jock approach is transparently self-interested and we look forward to providing our investors and other stakeholders with additional information to rebut these allegations."

David Horsley, Senior Vice President and CFO of Sino-Forest commented: "I am confident that the independent committee's examination will find these allegations to be demonstrably wrong, as for example:

(a)  Muddy Waters fundamentally misunderstands and misrepresents the most basic items in our published Management's Discussion & Analysis with respect to revenue generated from Yunnan Province, which we report as being approximately 45.5% of the Company's standing timber revenue of approximately US$508 million. Muddy Waters alleges that it is impossible that such revenue existed because achieving such levels would greatly exceed allowable cutting quotas and it would be impossible to truck close to that volume in the period.

However, that revenue was very clearly disclosed in our MD&A filed for Q1 and Q2 of 2010 as revenue resulting  from the sale of the standing timber - there is no cutting or transport involved, as the trees were sold but not harvested and therefore are not considered part of the quota for the region until the harvesting is conducted by the buyers.

(b)  Muddy Waters alleges that the Company overstated the assets in Yunnan Province, based on its erroneous and narrow assumption that our only purchases in Yunnan Province consisted of purchases of 20,574 ha of plantations in Gengma county in Yunnan. However, this allegation ignores the fact that in addition to the purchased plantations in Gengma county, (as disclosed in our 2010 annual MD&A of a total of approximately 193,000 ha purchased in Yunnan Province) we have purchased approximately 173,000 ha of plantations in approximately 25 other counties in Yunnan Province as of December 31, 2010."

As at December 31, 2010, the Company had approximately US$1.26 billion in cash, cash equivalents and short term deposits as reported in the audited consolidated balance sheet.  As at March 31, 2011, the comparable amount was approximately US$1.09 billion. The Company continues to hold such cash, with the majority of it in banks in Hong Kong and offshore.

As previously announced, the Company intends to file its Q1 2011 results on June 14, 2011.



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Fri, 06/03/2011 - 10:41 | 1335895 FOC 1183
FOC 1183's picture

Correct NFP to 53,999

Fri, 06/03/2011 - 10:39 | 1335904 FranSix
FranSix's picture

You win some, you lose some.

The Shit Blizzard

Fri, 06/03/2011 - 10:45 | 1335944 Hephasteus
Hephasteus's picture

The got those at sonic?

Fri, 06/03/2011 - 10:39 | 1335906 johnnymustardseed
johnnymustardseed's picture

The bigger you are the harder you fall!

Fri, 06/03/2011 - 10:40 | 1335907 Ancona
Ancona's picture


Justice, it's a bitch.

Fri, 06/03/2011 - 10:43 | 1335908 buzzsaw99
buzzsaw99's picture

no biggie, he's rich, his clients are rich, in fact, bennie b. will probably buy those stocks and bonds for a profit.

Fri, 06/03/2011 - 10:46 | 1335954 Urban Redneck
Urban Redneck's picture

one needs a bank license to get into that club

Fri, 06/03/2011 - 10:53 | 1335991 oogs66
oogs66's picture

bonds are down about 50% now.  From 100 --> 50.  That will leave a mark.

Fri, 06/03/2011 - 15:01 | 1337052 NotApplicable
NotApplicable's picture

A big red one. Will probably even burn and sting.

Fri, 06/03/2011 - 10:42 | 1335911 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

These crooks aren't in it for the money. They have more money than they could ever need. They are in it for the power... the power to control governments, which means the power to control YOU goyim scum.

Fri, 06/03/2011 - 10:41 | 1335918 RobotTrader
RobotTrader's picture

Wow, lots of hedge funds probably folding this quarter.

Volatility and specific stock risk has been a killer.

Wonder if Paulson will have to dump is good stocks to meet all the redemptions.

Fri, 06/03/2011 - 10:47 | 1335930 Arius
Arius's picture

perhaps, somebody might be after some know some hard assets...

usually these stock frauds are designed for small investors not for sophisticated players...just wondering...

Fri, 06/03/2011 - 12:09 | 1336331 Papasmurf
Papasmurf's picture

Small investors have left the scene.  This is evolution.

Fri, 06/03/2011 - 10:49 | 1335947 Canucklehead
Canucklehead's picture

That is a given...

Fri, 06/03/2011 - 11:25 | 1336109 ebworthen
ebworthen's picture

Perhaps he gets a tax write-off of some kind from the loss that he needs and is making a killing on other inside information with tips from Chinese friends?  Paulson will eventually need someplace to escape to like his erstwhile friend Hank.

(I believe people were overzealous on the junk button RoboTrader, not I).

Fri, 06/03/2011 - 15:10 | 1337088 NotApplicable
NotApplicable's picture

At this point, it's a conditioned response RT brought upon himself, regardless of the content of his current post.

I do find it interesting how many people care enough to junk him anyway.

Fri, 06/03/2011 - 10:42 | 1335920 baby_BLYTHE
baby_BLYTHE's picture

He should have listened to Marc Faber, the dude is like never wrong.

Short Term  Treasury rally- check

10% correction in the DOW- Check

China/Emerging Market slowdown- check

Fri, 06/03/2011 - 10:50 | 1335974 InconvenientCou...
InconvenientCounterParty's picture

He was singin' that tune throughout 2010.

I'm a fan of Mr. Faber if for nothing else than his mix of dry humor and that authoritarian accent.

Fri, 06/03/2011 - 12:00 | 1336297 gmrpeabody
gmrpeabody's picture


Fri, 06/03/2011 - 10:45 | 1335922 GeneMarchbanks
GeneMarchbanks's picture

Fuck John Paulson.

Fri, 06/03/2011 - 10:48 | 1335959 JuicedGamma
JuicedGamma's picture

You are so angry.  Now go take your pills like a good boy.

Fri, 06/03/2011 - 12:14 | 1336341 orangedrinkandchips
orangedrinkandchips's picture

yeah, JP can eat it....

Fri, 06/03/2011 - 15:11 | 1337100 Smokey1
Smokey1's picture

John Paulson eats shit.

Fri, 06/03/2011 - 10:46 | 1335936 Franken_Stein
Franken_Stein's picture


Holy shit !

And Ackermann just 3 weeks ago called Paulson "the superstar on Wallstreet" !

Looks like they've forgotten to place a mole, erm, I mean an expert from an expert network, with Sino Forest.


Well, you can't always win.


Fri, 06/03/2011 - 10:48 | 1335939 sunnydays
sunnydays's picture

Couldn't have happened to a nicer guy.  Karma is a Bitch.........

Fri, 06/03/2011 - 10:48 | 1335942 InconvenientCou...
InconvenientCounterParty's picture

Gold might not be an investment, but it's not a ponzi either.


Fri, 06/03/2011 - 11:01 | 1336017 Bay of Pigs
Bay of Pigs's picture

Really? Wait until Paulson's GLD ponzi falls apart. 

The destruction of these fraud ridden ETF's will be spectacular.

Fri, 06/03/2011 - 11:18 | 1336083 Hephasteus
Hephasteus's picture

Do you think they'll scream ponzai!!!! Before they die?


Fri, 06/03/2011 - 10:49 | 1335950 silvertrain
silvertrain's picture

haha..the sheep are shearing each other now..

Fri, 06/03/2011 - 10:49 | 1335951 zaknick
zaknick's picture

The dirty jooooos did it! lol

JP had it coming... I imagine this is nothing compared to the blood bath that will ensue once true price discovery comes's gonna be an awesome spectacle. Which is probably why you'll see a (nukular?) false flag carried out by the joooooos again instead.

Bow down to AIPAC, bitchez!!

Fri, 06/03/2011 - 10:47 | 1335955 Double down
Double down's picture

Did he own any puts?  Just one phone call from someone within Muddy to Paulson.... Just saying what we should all at least entertain.

Another story is that this is a great blow to the Canadian securities industry and its beloved auditors.

Fri, 06/03/2011 - 10:50 | 1335958 Fedophile
Fedophile's picture

Well, yesterday groupthink became gangbang


Tyler, you're so elegant, I love it!

Fri, 06/03/2011 - 10:51 | 1335963 agent default
agent default's picture

And to think I am feeling butthurt because of the silver action lately.

Fri, 06/03/2011 - 10:51 | 1335964 Fish Gone Bad
Fish Gone Bad's picture

That is like being hit in the nose.  It stings really bad and makes ones' eyes water.  Then it is followed by a hit to the eye, and that just adds insult to injury.  In the back of one's mind, there is the now all too real fear that another punch to the face is coming.  Duck?  Cover?  Run? 

First one out of the pool wins.

Fri, 06/03/2011 - 12:44 | 1336465 doggings
doggings's picture


Fri, 06/03/2011 - 12:42 | 1336468 doggings
Fri, 06/03/2011 - 10:48 | 1335965 John McCloy
John McCloy's picture

Oh it appears he is not so prescient when him and Goldman are not packaging up trash and then using their trading power to engineer short attacks in financial stocks.

Fri, 06/03/2011 - 11:13 | 1336054 pizzgums
pizzgums's picture


sux when the tables get turned, doesn't it...

Fri, 06/03/2011 - 10:52 | 1335972 ebworthen
ebworthen's picture

We are at war with China, we just don't realize it.

No actual shots of gunpowder or fueled projectiles but cyberwarfare attacks on individuals, military installations, and financial Lusitania's like this one.

China has funded Wall Street and Washington's orgy of mammon lusting, and the reasons are becoming all too clear; use the dark sides of capitalism and democracy to collapse them from within.

Fri, 06/03/2011 - 10:56 | 1335976 JuicedGamma
JuicedGamma's picture

The Chinese are very cagey and think they are smarter than US.  So did Japan in the 1990s and look at them now.

Rule number 1: Don't trust Russians, Don't trust the Chinese,  they are all still communist and corrupt.

Fri, 06/03/2011 - 11:15 | 1336056 ebworthen
ebworthen's picture

What is not communist leaning and corrupt about our government, the FED, the bailouts, and Wall Street rigged casino markets?

China is a completely different story and nation in so many ways and we have not nuked them into submission the way we did Japan.

Japan post WWII followed the American model and accelerated past us because of their small size and tight borders.

China has subs capable of taking down our carriers, has a billion people to throw at us, land mass, resources, a need for petroleum that will soon exceed our own, and a need for food that already does.

We are playing into their hands and rapidly becoming a second rate power industrially and financially while losing any moral authority we may have had.

Fri, 06/03/2011 - 11:38 | 1336181 Thisson
Thisson's picture

Hey how are they going to get those billion people here, genius?  Charlie dont surf.

Fri, 06/03/2011 - 12:16 | 1336362 Use of Weapons
Use of Weapons's picture

Take your tonal pick:

#1 You have a track record of allowing farm animals to govern Alaska - if they want to, they'll walk, with a USA company probably paying them to build the road / bridges to get it done properly.


#2 The Mouse Army marches on its feet.


Pick the one suitable to your mindset regarding pessimism/optimism.



Fri, 06/03/2011 - 11:47 | 1336233 Shock and Aweful
Shock and Aweful's picture

Marx said it 150 years ago...


"The Capitalists will sell us the rope with which we will hang them"


After the collaspe of Communism in Europe and the USSR, China was the last "communist" nation of any size on the planet.  They were our sworn enemy not even 30 years ago....

Maybe they looked around and realized that the only way to take down the U.S. would be to use our weakness for consumption against us. 



Fri, 06/03/2011 - 14:20 | 1336872 ebworthen
ebworthen's picture


Fri, 06/03/2011 - 10:54 | 1335977 haskelslocal
haskelslocal's picture

"Group think became Gangbang".... Fucking Priceless...

Fri, 06/03/2011 - 10:56 | 1335987 williambanzai7
williambanzai7's picture

Fri, 06/03/2011 - 10:56 | 1335988 Korrath
Korrath's picture

I like to start each day with a hot steaming cup of schadenfreude, spinkled lightly with mild contempt.  

I suspect I shall enjoy many a fine beverage like this for the next month or so.

Fri, 06/03/2011 - 12:12 | 1336333 gmrpeabody
gmrpeabody's picture

Schadenfreude (i /????d?nfr??d?/; German pronunciation: [??a?d?n?f???d?]) is pleasure derived from the misfortunes of others.[1] This German word is used as a loanword in English and some other languages, and has been calqued in Danish and Norwegian as skadefryd and Swedish as skadeglädje

Fri, 06/03/2011 - 10:57 | 1335994 mattwett12
mattwett12's picture


Probably shorted it.

Should I buy in for a rebound expecting them to "find a new forest" somewhere in the pacific ocean?

Fri, 06/03/2011 - 12:11 | 1336339 gmrpeabody
gmrpeabody's picture

The trees in Japan are getting bigger, I hear.

Fri, 06/03/2011 - 10:55 | 1335995 AldoHux_IV
AldoHux_IV's picture

These chinese fraud companies are quick to defend their shares (whether it's rhetoric or buyback of shares)-- nice little side drama to see unfold-- who is right in the end? People that can cook up numbers however they want or the truth?

Fri, 06/03/2011 - 10:55 | 1335996 Helvidius
Helvidius's picture


Fri, 06/03/2011 - 10:55 | 1335999 firefighter302
firefighter302's picture

"Idiots pilling upon idiots".   LOL.


Fri, 06/03/2011 - 10:55 | 1336000 baby_BLYTHE
baby_BLYTHE's picture

Anytime Greenspan or Bernanke speak Gold glitters.

Gold is the new reserve currency of the world. It is time the central banks wake up and take a whiff of 5,000 years of reality

Fri, 06/03/2011 - 10:59 | 1336004 I am Jobe
I am Jobe's picture

Hang both brothers and get the party going.

Fri, 06/03/2011 - 11:01 | 1336008 Drachma
Drachma's picture

I counted the word "independent" 11 times. Hence there will be no independent review.

Fri, 06/03/2011 - 10:59 | 1336012 gianakt
gianakt's picture

Does he start selling some of his Gold to make up for his loses.

Fri, 06/03/2011 - 11:00 | 1336015 bobby02
bobby02's picture

"Dilligenceless"? Are you William Safire?


Maybe the PM is long equity/short mezo?

Fri, 06/03/2011 - 11:03 | 1336024 che
che's picture

just looked through Paulson's holdings, and noticed he bought Lubrizol in Q1 2011...

Fri, 06/03/2011 - 11:03 | 1336025 TheTmfreak
TheTmfreak's picture

Investing? More like reckless gambling.

Fri, 06/03/2011 - 11:09 | 1336038 Americant Expat
Americant Expat's picture

Yeah, but can't Paulson just back the Hummer up to the Fed's discount window?

Fri, 06/03/2011 - 11:11 | 1336046 Shock and Aweful
Shock and Aweful's picture

hahaha - This guy is a piece of shit parasite.  He contributes nothing, creates nothing...his whole exsistence is nothing more than skimming pennies off the top on an industrial scale.  That is the entire business model.


Don't cry for John though...he is a very "creative" man...he will figure out a new way to get his parasitical tenticles into something he can suck some free "money" for doing nothing.


That is really the whole problem isn't it?  Our entire economy is NOTHING more than a buch of parasites sucking off of each other...none of them add anything to society, none of them create anything.  People like Paulson do nothing but use other people's money to skim wealth off the top of a productive society. 


Our entire concept of what money is and how it is created is a complete farce.  The entire system is flawed beyond repair and is starting to crumble because the support system that has held it up for the last 100 years has been nearly hollowed out by parasites like this guy.

I only hope that when it collapses under it's own weight....that it buries all of these parasites under the detrius of their own making.  Hopefully, they will all be so completely wiped out and destroyed that our society will be able to start functioning as a true free-market again at some point and that their entire way of doing things will only exsist in the history books under a chapter called "How an economic fantasy and a blatent disregard for the common good caused the downfall of  the greatest economic and military superpower the world has ever known"


(Maybe he will "jump"  from his office after finding out his "lectronic credits" are short by half a billion?)

Fri, 06/03/2011 - 11:25 | 1336110 Franken_Stein
Franken_Stein's picture


Well said, mate.

The US must rid itself of the parasites and leeches by sending them all to jail for life, seizing and disappropriating all their remaining assets, sell them on the market and hand the money back to the American people, or denying those bastards the right to work in the financial industry for the rest of their lives.


I doubt that they ever held a hammer or a broom in their hands in their entire life, because that would amount to real and honest work and not the shuffling and flipping of worthless paper.


Fri, 06/03/2011 - 11:13 | 1336057 slaughterer
slaughterer's picture

Paulson Schadenfreude. 

Fri, 06/03/2011 - 11:25 | 1336130 Bartanist
Bartanist's picture

People, especially those in finance have gotten lazy.

They don't do the necessary work and just scoop up unearned money (if they are on the "inside")  from those outside of the Wall Street/Washington/London circle jerk.

Why work? Why do anything productive ... if money just falls into your lap from doing nothing except sucking up to a connected friend or two?

It is a problem whether on Wall Street or in Washington, it is the same. If working hard or being lazy makes no difference, then what is the point of working (unless of course you have self-respect and ethics ... such outdated concepts.).

Fri, 06/03/2011 - 11:30 | 1336139 Problem Is
Problem Is's picture

When 2 thieves meet... they still each other's wallet...

Fri, 06/03/2011 - 11:29 | 1336147 Stuck on Zero
Stuck on Zero's picture

Darn.  It crashed before Paulson could pump and dump it.

Fri, 06/03/2011 - 11:30 | 1336155 onarga74
onarga74's picture

At least Mr. P has a substantial gold holding he can unload.  That should be forthcoming and if you own any you may want to be in front Mr. Paulsons golden diarrhea. Gold was trying to spike up on the awesome jobs report but it's beginning to reverse. 

Fri, 06/03/2011 - 11:36 | 1336166 scratch_and_sniff
scratch_and_sniff's picture

Insanity, how could this guy be so gullible? You would think that when throwing that kind of money around he would have people doing the groundwork. I wonder how much Muddy Waters has made out of these finds? what a legend, it just shows the benefits of hard work.

Fri, 06/03/2011 - 11:40 | 1336193 VFR
VFR's picture

I wonder if he'll now really have to sell some of his gold futures to cover losses. 

Fri, 06/03/2011 - 11:42 | 1336220 dcb
dcb's picture

considering the fraud he was engaged with with goldman, it is just deserts, he should be in the slammer being someone's girlfriend

Fri, 06/03/2011 - 11:42 | 1336226 YesWeKahn
YesWeKahn's picture

Nobody can win all the time, lets see how Paulson plays out the QE3. At this point, I think JP should get out of the market all togather, he can't out smart the corruption.

Fri, 06/03/2011 - 11:59 | 1336285 monopoly
monopoly's picture

As usual, this market is nuts, it is trying to hold on. Last hour going to be interesting. Got a couple of shorts and holding confetti for now. Gold just will not ramp up. Might be headed a little lower over the next few trading days. Waiting for my pitch. And the dollar is just trashed. A little frustrating, but being patient.

Fri, 06/03/2011 - 12:09 | 1336303 Use of Weapons
Use of Weapons's picture

No maid involved?

Pft, minor slap on the wrists for something naughty... like mooting $4k gold & being rude to everyone. In France.


[note forbes hotlinking to here, even if it is a blog]


Q. In managing money for ten years, what have been your worst experiences and what have you learned from them?

A. The only year when we lost money over the past nine years was 1998 when we lost about 4%. We got caught in August 1998 in the Long Term Capital debacle when we had too great an exposure to event arbitrage situations. When we analyzed where we had losses, we found that most of the losses were confined to the event arbitrage portfolio. Since then, we have reduced or eliminated our event arbitrage portfolio as a way to reduce our correlation to market downturns and we have had much less volatility, and far greater protection of investor capital in market downturns. For example, we were profitable in each of 2000, 2001 and 2002 even though all the major market indices declined.

Q. Can you describe your organization?

A. We have nine people, including three analysts, a trader, a trader’s assistant , a controller, an office manager and a director of marketing. (Two of our analysts have M&A backgrounds, Andrew Hoine who came from JP Morgan and Michael Waldorf who came from CSFB.) We are contemplating hiring a compliance/risk management officer. Our goals are to continue to grow our asset base and remain focused on the merger arbitrage area. We think merger arbitrage is a very attractive long term alternative investment strategy and can produce good returns, with low volatility and minimal correlation. We want to be one of the top performers in our category.  -- 2003 interview. So, just who was hired for that position?


However, as 39th richest man in the world, I've a feeling he can spare the money for this speeding fine. It was mentioned on another year end report posted earlier that everyone needed to not get ahead of themsevles, even if they like the short end of the market.


Fri, 06/03/2011 - 12:07 | 1336328 Caviar Emptor
Caviar Emptor's picture

Every new crisis starts with an event like this

Fri, 06/03/2011 - 12:31 | 1336404 Atch Logan
Atch Logan's picture

So the company, Muddy Waters,  who is making the charges against the China company (actually a Canadian company) in business for 16 years, claimed the company was bogus based upon some data the company claims they never alleged: to wit: the cutting down and processing of trees in some provance.

Muddy Waters is shorting this company, was doing so before it made its allegations, and then, hahaha, it never contacted the company for clarification/refutation of allegations. 

The company files a response, which, apparently, no one is reading or giving credence to, including zerohedge.  I never heard of this company before, do not own stock in it, but, from the information put forth, I am having a great bit of trouble seeking blood from this company at this point.

I do own the stocks of three Canadian companies that own subsidiaries in China and Mongolia. All of them use Canadian accounting firms.  However, people like Muddy Waters, whose allogations may be false, and who are shorting these companies before making charges, may be doing damage to them and my pocket-book, with random and unfounded charges towards Chinese/Canadian companies as a whole.


Fri, 06/03/2011 - 17:20 | 1337609 Spitzer
Spitzer's picture

That is the beauty of capitalism though...If Muddy Waters turns out to be wrong, they will get all the redemptions and law suits. They would be fucked instantly. It pays to be honest in MW business.

Fri, 06/03/2011 - 12:52 | 1336494 agrotera
agrotera's picture

What I wonder is, how much did JP and Paulson have invested in Muddy Waters LLS.?

How convenient...thanks to the sacrosanct status of the agents running money for the privately held Federal Reserve Corporation  these blackhearts can just start a different fund to make it look like they are imploding while making out like gangbuster criminals with your new stake in a broken market...priceless.

Fri, 06/03/2011 - 12:58 | 1336529 Atch Logan
Atch Logan's picture

Yeh, Agrotera, you may be right: just another fucking scam.  But, if one is going to buy Canada stocks, at least there is Sedar.  One has a chance to get to the truth and do due dilligence (sp) before purchase and on an ongoing basis.  In the US, basically this is impossible now. Because of Sedar, I am having real problems believing Muddy Water's claims. Whatever. God help us all!

Fri, 06/03/2011 - 13:03 | 1336533 Downtoolong
Downtoolong's picture

the company .....says not to believe MW because they are short.


No way, that's Goldman's job. 

Fri, 06/03/2011 - 13:04 | 1336546 HowardBeale
HowardBeale's picture

Halted in the U.S.?

Fri, 06/03/2011 - 13:10 | 1336565 mattwett12
mattwett12's picture


"Muddy Waters, based in Hong Kong, said the amount of land the company said it bought from Lincang City in China’s Yunnan province doesn’t match city records."


Sat, 06/04/2011 - 09:19 | 1339039 JW n FL
JW n FL's picture

is the company clean and the city dirty? Oops!

Fri, 06/03/2011 - 13:33 | 1336670 I am a Man I am...
I am a Man I am Forty's picture

I love it when shit like this happens, it exposes what a complete joke most hedge funds and analysts are, i do give props to paulson for setting up a fund to do nothing but short subprime and selling it as a hedge, that was smart

Fri, 06/03/2011 - 13:35 | 1336707 PulauHantu29
PulauHantu29's picture

If he still holds his $40 Billion of gold then I suspect he will be ok in the long run.

Of course, he can just turn into a bank and swagger up to the Fed Window and have taxpayers bail out his losses like the rest of Wall Street.

Fri, 06/03/2011 - 13:45 | 1336747 PulauHantu29
PulauHantu29's picture

I love it! These folks working for these pimps with a "Buy" recommendation.....he he he.

They need to go work for those rating agencies that had a "Buy" rating on Lehman MiniBonds up 'till the week they went under.


Fri, 06/03/2011 - 15:22 | 1337138 Wampeter
Wampeter's picture

Truly a small price to pay to give credence to an attack on evil Chinese stocks to distract from our own weakness.  There had been warnings for about 2 months now that "something like this" might happen.


Interesting times.

Fri, 06/03/2011 - 15:52 | 1337318 Ura Bonehead
Ura Bonehead's picture

...there is no such thing as a consistently good hedge fund, and it is all merely a function of one right trade, at the right time, executed with infinite amounts of leverage...


You left out, 'and only after an excessive amount of corruptible insider information.'

Fri, 06/03/2011 - 19:03 | 1337930 Buck Johnson
Buck Johnson's picture

I would hate to lose that much money on this fraud.  Our markets are nothing but a fraud machine designed to suck money out of anybody stupid enough to invest in anything.

Fri, 06/03/2011 - 19:43 | 1338032 XPolemic
XPolemic's picture

If you have ever spent time with the Chinese you will know that the more strenous the denial, the more likely it is to be true.

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