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> A private investigation revealed it might have understated its debt by $4.5 billion in 2019. Shetty’s financial services firm Finablr, an LSE-listed enterpris

> A private investigation revealed it might have understated its debt by $4.5 billion in 2019. Shetty’s financial services firm Finablr, an LSE-listed enterprise that owns the remittance firm UAE Exchange, has discovered that $100 million worth of cheques were issued from the company without the board’s knowledge. The interesting question here would be - Who should foot the bill? The shareholders can only take action based on data they have in public. It's the job of govt agencies along with the corporation to ensure that the data is appropriate. Now, you have people investing into equity based on data ... which was falsified.

Retric 6y ago
Shareholders should discount companies without proper financial audits. The trade off in theory is higher risk for higher rewards without that overhead. In practice that’s not what happens. It’s really several short and long term feedback loops. If the market is efficient then excessive due diligence is a waste and a low overhead ‘dumb’ investment strategy is ideal. However, should everyone take that stance company management has huge incentive to cheat and fleece that dumb money. If dumb money is being fleeced that pushes for regulations while ‘smart’ money has higher profit. But, should those regulations work they get torn down as excessive wastes.
- denzil_correa 6y ago
  There should never be a company that runs for an extended period of time without proper financial audits. It is THE job of regulators to ensure appropriate audits. NMC Health IPO'd on 2012 and the fraud was found in 2019. Muddy Waters a private research firm was able to discover the fraud which puts into question the regulators here. One can't just simply push responsibility of audits on the "reward - risk" line to ordinary folk.
  - Retric 6y ago
    Which regulator’s job do you think it is to audit all public companies every X years, and based on what laws? There are rules around audits, and it’s illegal to do specific things in the US. But enforcement is reactive not proactive.
heavenlyblue 6y ago
“The government” should use their surveillance facilities to penetrate companies like that and destroy them before they start hemorraging taxpayer money. I am surprised they still haven’t used that as a way to justify surveillance policies.
sk5t 6y ago
The shareholders eat the loss. Maybe they can sue the board or officers, but that is the end of the line. It's not taxpayers' problem. Ask yourself this: who made Enron shareholders whole after the scandal? Who compensated Bernie Madoff's victims?

Retric 6y ago

Shareholders should discount companies without proper financial audits. The trade off in theory is higher risk for higher rewards without that overhead. In practice that’s not what happens. It’s really several short and long term feedback loops. If the market is efficient then excessive due diligence is a waste and a low overhead ‘dumb’ investment strategy is ideal. However, should everyone take that stance company management has huge incentive to cheat and fleece that dumb money. If dumb money is being fleeced that pushes for regulations while ‘smart’ money has higher profit. But, should those regulations work they get torn down as excessive wastes.

denzil_correa 6y ago
There should never be a company that runs for an extended period of time without proper financial audits. It is THE job of regulators to ensure appropriate audits. NMC Health IPO'd on 2012 and the fraud was found in 2019. Muddy Waters a private research firm was able to discover the fraud which puts into question the regulators here. One can't just simply push responsibility of audits on the "reward - risk" line to ordinary folk.
- Retric 6y ago
  Which regulator’s job do you think it is to audit all public companies every X years, and based on what laws? There are rules around audits, and it’s illegal to do specific things in the US. But enforcement is reactive not proactive.

heavenlyblue 6y ago

“The government” should use their surveillance facilities to penetrate companies like that and destroy them before they start hemorraging taxpayer money. I am surprised they still haven’t used that as a way to justify surveillance policies.

sk5t 6y ago

The shareholders eat the loss. Maybe they can sue the board or officers, but that is the end of the line. It's not taxpayers' problem. Ask yourself this: who made Enron shareholders whole after the scandal? Who compensated Bernie Madoff's victims?