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Not only that, they went after the short sellers who were writing about it publicly. > Germany's pursuit of short sellers began when Perring’s previously littl
by thomaskcr 6y ago
Not only that, they went after the short sellers who were writing about it publicly.
> Germany's pursuit of short sellers began when Perring’s previously little-known outfit, called Zatarra Research, published its report about Wirecard.
> In March, just three months before Wirecard’s collapse, prosecutors dropped their case against Perring after he agreed to make a donation of an undisclosed sum to a charitable organization.
Finance watchdogs are archaeologist organizations when it comes to fraud, they come in after the fraud has blown up and sift through the evidence to see what happened. Between that, they are busy going after people with too little money to defend themselves mostly.
https://www.yahoo.com/news/germany-long-lonely-campaign-battling-051620645.html https://www.yahoo.com/news/germany-long-lonely-campaign-batt...
- camjohnson26 6y agoThis is the true value of short sellers to the market. They were blowing the whistle on Wirecard for years before the regulators or company insiders did anything. The problem is they always look like fools while the company valuation goes up but then get vindicated all at once when it collapses, if it ever collapses.
- Traster 6y agoThis is the problem with short setlling - you don't need the company to be a fraud, you need it to be publicly outed as a fraud in a timeframe you can afford. This is what distinguishes 'The Big Short' and Bill Ackman with Herbalife. The mortgage crisis had a timeline for when the collapse would happen, that was the key. With Herbalife it was down to Ackman to convince the entire market that Herbalife wasn't a real business.
- dna_polymerase 6y agoHerbalife still is a 'real' business. Ackman would like you to think otherwise but it still is. The whole thing might be a point against short sellers.
- AndrewBissell 6y agoAnother famous short seller, John Hempton, responded to Ackman's short with a very public investment case for going long Herbalife (he argues it's a kind of social club with supplement sales attached as dues). Short sellers definitely don't bat anything close to 1.000 though.
- Apocryphon 6y agoSounds like regulators have found Herbalife to be fraudulent after all, even if it hasn't affect it's stock price too much. https://dealbreaker.com/2020/05/herbalife-fined-for-china-bribery https://dealbreaker.com/2020/05/herbalife-fined-for-china-br...
- legulere 6y agoThey went after inside trading, as the release of the FT article seemed to be timed with the short sellers.
- gridlockd 6y agoThey didn't prosecute "short selling", they prosecuted market manipulation: 1. Get a large short position 2. Publish damaging information 3. Profit It doesn't even matter if the information is true. If it is true, it is insider trading. If it isn't true, it is libel. Either warrants prosecution.
- marta_morena_25 6y agoExactly, short-selling and writing a damaging article is kinda similar to Casino Royale... Just well, you don't try to explode a new airplane prototype while fighting off James Bond, you just write a damaging blogpost. The concept is the same though.
- sdinsn 6y ago> If it is true, it is insider trading. No, it's only insider trading if the information is based on insider (AKA private) information. Anything that can be derived from public information, even with a stretch, is also considered public.
- gridlockd 6y agoI could have made myself clearer, I am talking about "damaging insider information". Publishing already published information isn't exactly news. In this case, the alleged accounting fraud mentioned in the FT article was insider information.
- oh_sigh 6y agoIt depends where the knowledge came from - did it come from an insider, or was the accounting fraud discovered by poring over public records?
- KKKKkkkk1 6y agoYou don't understand what the word insider in "insider trading" means.
- 6y ago