Understanding Stock Market Risks - Financial Fraud Risk is Real! (5) - Refreshing

Read? Understanding Stock Market Risks - Financial Fraud Risk is Real! (5)

ALL investment by nature is RISKY!

This is the standard answer to anyone who drinks coffee with Uncle8888 and talks about investing strategies when they ask on how to avoid losing money.

Uncle8888 has mentioned it many times in his blog. That why it is called investment as we may lose some or the whole sum of capital invested. If one wants to play safe and feel PROTECTED then it is better to be good savers. Inflation will just kill us softly and most of the time we may not even feel the pain for long when we are good savers over decades of rising earned income.

Createwealth8888:

The Hen & the Pig Go To Breakfast

A Hen and a Pig were sauntering down the main street of an Indiana town (yes, this is another shaggy dog story!) when they passed a restaurant that advertised “Delicious ham and eggs: 75 cents.” “Sounds like a bargain,” approved the Hen. “That owner obviously know how to run his business. “It’s all very well for you to be so pleased about the dish in question,” observed the Pig with some resentment. “For you it is all in the day’s work. Let me point out, however, that on my part it represents a genuine sacrifice.”

All stocks by nature are risky. 


We can only protect themselves by risk control and money management. So you the Hen or Pig when come to investing your money in any one stock?

Understanding Stock Market Risks - Financial Fraud Risk is Real! (8)

 CW8888: Any "mo" can fake their accounts and not just S-chips!

 

Read? Understanding Stock Market Risks - Financial Fraud Risk is Real! (7)

Wifi firm Gowex says results fake, heads to bankruptcy

 

MADRID: Spanish free wifi provider Let's Gowex revealed on Sunday its accounts have been falsified for at least four years and said it is filing for bankruptcy protection.

Gowex, which offers wifi services in world capitals including Paris and New York, made the devastating admission after days of protesting that a damaging US report on its operations was incorrect and defamatory.

Gowex president Jenaro Garcia Martin informed his board the previous day that, in fact, he had faked the company's results, the firm said in a statement released by Madrid's Alternative Equity Market.
"Garcia Martin, chief executive and president, said before several board members that the company accounts for at least the last four years do not reflect the true picture, attributing this falsehood to himself," Gowex said.

Board members revoked the chief executive's powers and accepted his resignation, it said.

"The board, confronted by the expectation that the company would not be able to cope with its maturing current debt payments, agreed to file a voluntary request for bankruptcy."

Gowex had been expected to give a detailed response on Monday to allegations about its operations, which had sent its shares plunging 60.2 per cent to 7.92 euros in two days before they were suspended from trade by Madrid's junior stock market, the Alternative Equity Market.

- Shares worth "zero" -

US firm Gotham City Research sparked the freefall Tuesday by publishing a highly critical report, which had previously been described by Gowex as "unfounded and defamatory".
Gotham City Research called Gowex a "charade" and said its revenues were far lower than the company had reported.

Gotham City said its target price for Gowex shares was zero.

In its 93-page report, Gotham City said Gowex's actual revenues were "at most" 10 per cent of those reported.

About 90 per cent of Gowex's telecommunications revenues came from undisclosed related parties, Gotham City said.

Gowex's audit fee was only 40,000 euros, far less than would be expected for a company generating revenues of more than 180 million euros, the firm said.

"We have evidence Gowex's largest customer was really itself," the report said.
After Gowex issued the statement saying that Garcia Martin had faked the firm's results, he announced on Twitter that he had made a "voluntary confession in court".

"I am willing to face the consequences and cooperate with justice," the former wealth management manager added.

The posting followed an earlier Twitter message in which he said he was "wholeheartedly sorry" and apologised to "everyone".

The European professional investors association ASINVER filed a suit Friday against Gowex with the Spanish public prosecutor alleging false accounting.

"Given the lack of response by the company for requests for more information, we had no choice but to ask the public prosecutor to look into the issue because it is very likely that a crime took place," Javier Flores of the Spanish branch of ASINVER told public television.

Spanish stock market regulators are also likely to face scrutiny over their supervision of the firm's activities.

On Wednesday, the Spanish market regulator, the CNMV, said it had asked the US Securities and Exchange Commission and Britain's Financial Conduct Authority "for information about Gotham City Research LLC and its administrators".

The CNMV said it did so "in order to analyse whether the document published by that entity on Let's Gowex could constitute a possible abuse of the market".

On the same day, Gowex had issued a statement confirming its 2013 revenues of 182.6 million euros ($249 million) and stressing that the figures had been audited.

"We are a high growth company that is financially stable and very solid and we are being attacked," Garcia Martin said that day in an interview with Spanish public television.

- AFP/ec

Understanding Stock Market Risks - Financial Fraud Risk is Real! (7)

 Read? Understanding Stock Market Risks - Financial Fraud Risk is Real! (6)

Caterpillar writes off most of China deal after fraud

 By Ernest Scheyder

(Reuters) - Caterpillar Inc uncovered "deliberate, multi-year, coordinated accounting misconduct" at a subsidiary of a Chinese company it acquired last summer, leading it to write off most of the value of the deal and wipe out half a quarter's profits.
Caterpillar, the world's largest maker of tractors and excavators, said on Friday it would take a noncash goodwill impairment charge of $580 million, or 87 cents per share, in the fourth quarter of 2012.

Analysts had expected the company to earn $1.70 per share in the fourth quarter, according to Thomson Reuters I/B/E/S.
Caterpillar closed the purchase of ERA Mining Machinery Ltd and its subsidiary Siwei last June, paying HK$5.06 billion, or $653.4 million at current exchange rates.
A member of the Caterpillar board during the course of the Siwei deal told Reuters the board was distracted at the time by a larger transaction and paid relatively little attention to the Siwei acquisition.

"It came as a complete surprise to us," the former board member said of the fraud, speaking on condition of anonymity because of the sensitivity of the situation. "It was presented to us as a pretty straightforward transaction. It's a shame. It should have been investigated further."

In a statement, Caterpillar said an ongoing investigation launched after the deal closed "determined several Siwei senior managers engaged in deliberate misconduct beginning several years prior to Caterpillar's acquisition of Siwei."

The company said it had replaced several senior managers at Siwei, adding that their conduct was "offensive and completely unacceptable."

Caterpillar was not immediately available for further comment.

Representatives for Siwei were not immediately available for comment before business hours on Saturday morning in China.

Representatives for Citigroup and Freshfields Bruckhaus Deringer LLP, which served as financial and legal advisers to Caterpillar on the transaction, could not be immediately reached for comment.

Blackstone and DLA Piper, which acted as ERA's financial and legal advisers, were not immediately available for comment.

Advice from Createwealth8888

The Hen & the Pig Go To Breakfast

A Hen and a Pig were sauntering down the main street of an Indiana town (yes, this is another shaggy dog story!) when they passed a restaurant that advertised “Delicious ham and eggs: 75 cents.” “Sounds like a bargain,” approved the Hen. “That owner obviously know how to run his business. “It’s all very well for you to be so pleased about the dish in question,” observed the Pig with some resentment. “For you it is all in the day’s work. Let me point out, however, that on my part it represents a genuine sacrifice.”



All stocks by nature are risky.

We can only protect themselves by risk control and money management. So are you the Hen or Pig when come to investing your money in any one stock?




Bad Luck can happen to us when we are investing so we must PROTECT ourselves against losing too much of our investing capital when bad luck hit us.

Don't EVER be that Smart Alec in FA or TA!!!

Once our large losses are locked in, it will take years and much larger profit to recover!

Method, Mind, and Money Management!!!

What did you notice above???

 

 


Do you care to share???

Understanding Stock Market Risks - Financial Fraud Risk is Real! (6)

 Financial Fraud Risk is Real!


Read? Understanding Stock Market Risks - Financial Fraud Risk is Real! (5)

KMC. Beloved by many value investors.

Read announcement from Kingsmen Creatives Ltd

Kingsmen caught up in allegations of financial irregularities

Audit committee notifies Commercial Affairs Department of suspicious transactions

 

By

Grace Leong

IT CLINCHED multi-million dollar contracts to build facades for various attractions at Resorts World at Sentosa's Universal Studios theme park and was in the limelight for its involvement in the Formula One Singapore Grand Prix and other major events.

It has even won a corporate governance award.

But Kingsmen Creatives Ltd, a design, exhibitions and interior fit-out group, is now in the spotlight for alleged financial irregularities involving its exhibits arm, Kingsmen Exhibits, and two subcontractors.

It was disclosed in an announcement to the Singapore Exchange yesterday that Ernst & Young, who are external auditors for Kingsmen Creatives, submitted a confidential report on the company on Jan 11 to the Minister of Finance, flagging "serious offences involving fraud or dishonesty" against two of its subsidiaries following an audit.

 MR SOH
'The two employees thought they were under pressure to tell accounts they have done the job within budget. But no money went into the two employees' pockets. They did not cheat the company's money.'

-----------------------------------

Createwealth8888:

The Hen & the Pig Go To Breakfast

A Hen and a Pig were sauntering down the main street of an Indiana town (yes, this is another shaggy dog story!) when they passed a restaurant that advertised “Delicious ham and eggs: 75 cents.” “Sounds like a bargain,” approved the Hen. “That owner obviously know how to run his business. “It’s all very well for you to be so pleased about the dish in question,” observed the Pig with some resentment. “For you it is all in the day’s work. Let me point out, however, that on my part it represents a genuine sacrifice.”



All stocks by nature are risky.

We can only protect themselves by risk control and money management. So are you the Hen or Pig when come to investing your money in any one stock?

Method, Mind, and Money Management!!!

Understanding Stock Market Risks - Financial Fraud Risk is Real! (5)

Read? Understanding Stock Market Risks - Financial Fraud Risk is real! (4)


CHINA Hongxing Sports' special auditor found that the company overstated FY2010 cash and bank balances by 1.15 billion yuan, while payments were made without board approval at two key subsidiaries.

Trading of shares in the company has been suspended since Feb 28 last year, after external auditors Ernst and Young flagged financial irregularities in its FY2010 accounts. The board appointed nTan Corporate Advisory to carry out an independent investigation on March 1 last year.

nTan said in the report, released last night, that the group had cash and bank balances of 263 million yuan as at Dec 31, 2010, not 1.42 billion yuan as claimed in its initial FY2010 accounts.

In its revised accounts, the group said the disparity was due to expansion expenses, as well as payments to six distributors in the form of short-term interest-free loans among other items.

-----------------------------------

Createwealth8888:

The Hen & the Pig Go To Breakfast

A Hen and a Pig were sauntering down the main street of an Indiana town (yes, this is another shaggy dog story!) when they passed a restaurant that advertised “Delicious ham and eggs: 75 cents.” “Sounds like a bargain,” approved the Hen. “That owner obviously know how to run his business. “It’s all very well for you to be so pleased about the dish in question,” observed the Pig with some resentment. “For you it is all in the day’s work. Let me point out, however, that on my part it represents a genuine sacrifice.”



All stocks by nature are risky.

We can only protect themselves by risk control and money management. So you the Hen or Pig when come to investing your money in any one stock?

Understanding Stock Market Risks - Financial Fraud Risk is real! (4)

Read? Understanding Stock Market Risks - Financial Fraud Risk is real! (3)

Honesty???

We will never know someone is honest or not until until his/her death; then only we can say this man or woman is truly honest. (or at least they were not publicly caught for dishonest acts if any during their life time).

Createwealth8888 is an honest person till the time of writing this post as he has not been caught red-handed publicly for cheating on several occasions.

Financial Fraud Risk is Real

Like honesty, we cannot assume that there is no financial fraud risk in our invested companies. All investment by nature are risky and financial fraud risk is real. This risk can never be analyzed by anyone and not even by world-class analysts or board members. So it is wise for us to protect ourselves against this risk through good portfolio management.

Crisis at Olympus

Read that headline news: GIC's exposure to Olympus 'minimimal'. Investment firm says almost all of its stake in troubled Japanese company disposed of; not known if any losses incurred.

Olympus is a 92-year-old company and Japanese are still leaders in camera technology, and Olympus is one of the top manufacturers in Japanese.

When the top management has intentionally hide all these losses, and no one will be able find them, not even their board members if the top management has carefully hidden them.

Createwealth8888's Risk Management

I don't have big balls to build up to more than 10% of my total capital in any one counter and no matter how safe the counter may look like e.g. SPH, SGX, SMRT, etc those that can't fail in Singapore context. I saluted those can put more than 50% of their capital into one counter. They really have big balls or they don't think that financial fraud risk is real.

Understanding Stock Market Risks - Financial Fraud Risk is real! (3)

Read? Understanding Stock Market Risks - Financial Fraud Risk is real! (2)

Createwealth8888: Another one and definitely it will not be the last one! Just for this reason alone we should be wise not heavily weighted in any one counter in our portfolio.

Singapore, 12 September 2011 – Singapore Technologies Engineering Ltd (ST Engineering) wishes to announce that on 8 September 2011, Patrick Lee Swee Ching, currently Chief Financial Officer of Vision Technologies Systems, Inc. (VT Systems), was arrested by the Corrupt Practices Investigation Bureau (CPIB), for an offence under Section 477A of the Penal Code, Chapter 224.1

He has not been charged in Court. Patrick Lee was released on bail and has been granted permission by the CPIB to leave Singapore. He returned to the US on 10 September 2011 to resume his responsibilities as the Chief Financial Officer of VT Systems. VT Systems is the holding company for ST Engineering's aerospace, electronics, land systems and marine interests in the US.

Patrick Lee was previously the Group Financial Controller for Singapore Technologies Marine Ltd (ST Marine). It is believed that the CPIB is investigating certain transactions involving former and current employees of ST Marine. We are aware that two current and one former employee of ST Marine have also been arrested by the CPIB and released on bail. These employees do not hold key management appointments in the ST Engineering Group.

We are unable to provide further details at this time as we understand that the CPIB’s investigation is ongoing. An internal inquiry has also been commissioned with respect to this matter. We will take appropriate action as necessary after the inquiry has been completed and we have reviewed the findings. ST Engineering will make timely announcements as necessary. The ST Engineering Group has been extending and will continue to extend its fullest cooperation to the CPIB in its investigation.

Understanding Stock Market Risks - Financial Fraud Risk is real! (2)

Read? Understanding Stock Market Risks - Financial Fraud Risk is real!

Another two more S-Chips ... Fraud risk and as retail investors we can mitigate such risks by sticking on to those Singapore companies only as our law can punish those wrongdoers.

CHINA HONGXING SPORTS LIMITED
http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_3A083542C04BF3C14825784200471E1F/$file/CHX_final.pdf?openelement


HONGWEI TECHNOLOGIES LIMITED
http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_9636143006ACE2424825784300385AB4/$file/Hongwei_auditissues.pdf?openelement

Understanding Stock Market Risks - Financial Fraud Risk is real! (3)

Read? Understanding Stock Market Risks - Financial Fraud Risk is real! (2)

Another one! This type of risk can never be discovered through by any sort of TA or FA.

------------------------------------------------------------------------------------------


Scam cheques leave dent on crust of BreadTalk


Malaysian unit discovers issue of RM1.5 million in unauthorised cheques; police report filed

By FELDA CHAY

SOMEONE has been skimming the cream off BreadTalk Group. The food and beverage player said yesterday that its Malaysian unit had found that unauthorised cheques had been issued to the tune of RM1.5 million (S$623,000).

BreadTalk spokesman Joyce Koh said that the unit, ML Breadworks, uncovered the misappropriation last week during a routine internal review. ML Breadworks is 90 per cent owned by BreadTalk International, a wholly owned subsidiary of BreadTalk Group.

A police report has been lodged in Malaysia and investigations are underway.

A finance manager from another of BreadTalk's subsidiaries in Malaysia has taken charge of the financial operations of ML Breadworks with immediate effect.

'Right now, we do not have a clear view on who the culprit is, so we are doing this to ensure an independent eye is kept on the (company's) processes, and to ensure that operations continue to run smoothly,' said Ms Koh.

BreadTalk, whose brands include Food Republic, Toast Box and Din Tai Fung, became famous for the pork floss buns sold at its bakeries. According to its website, it has more than 300 boutique bakeries and 40 food atriums and restaurants.

The misappropriation of funds has dented the group's third-quarter results. A $622,000 provision was made - equivalent to about 4 per cent of pre-tax profit for 2009.

Yesterday, after the market closed, BreadTalk reported a 4.8 per cent rise in Q3 net profit to $2.8 million. This translated to earnings per share of one cent.

Pre-operating expenses incurred for its first Din Tai Fung restaurant in Thailand contributed to the lacklustre Q3 showing. For Q3 a year ago, BreadTalk earned $3.2 million.

BreadTalk said: 'Raw materials cost will continue to challenge companies in the food and beverage retail space. The group will continue wherever possible to contract directly with our key materials suppliers to mitigate the impact of price escalation.'

Q3 revenue rose 26.8 per cent to $81.3 million.

The bakery segment of the business registered a 49 per cent decline in operating profit to $0.9 million, mainly due to the provision for loss as a result of the misappropriation of funds, and a lower contribution from Singapore bakery operations. BreadTalk attributed the latter to the removal of the government's Jobs Credit Scheme.

BreadTalk shares closed 0.8 per cent or half a cent higher at 65 cents yesterday.

Understanding Stock Market Risks - Financial Fraud Risk is real! (2)

Read? Understanding Stock Market Risks - Financial Fraud Risk is real!

Another one! This type of risk can never be discovered through by any sort of TA or FA.

-------------------------------------------------------------------------------
SLA staff member charged with fraud of $11.8m


SINGAPORE: A senior staff member of the Singapore Land Authority (SLA) is facing 249 charges of cheating the Authority $11.8 million.

40-year-old Koh Seah Wee was charged on June 25 and is alleged to have conspired with two others, Lim Chai Meng and Ho Yen Teck to cheat the Authority.

He did so by awarding network maintenance contracts to various companies.

Koh was a deputy director with SLA's Technology and Infrastructure Department. His level of approval allowed payments to be made to these shell companies and no work was done to fulfil the contracts.

According to some charge sheets, payments were made in amounts ranging from $25,000 to $60,000.

Koh also faced several charges of using the ill-gotten gains of his cheating scheme to buy cars and properties.

The charges spelt out that Koh had used the money to pay for a Lamborghini, Mercedes Benz cars, acquire property at Axis@Siglap along East Coast Terrace, and purchase various unit trusts.

Koh is being defended by Lawyer Ravinderpal Singh and his case will be mentioned again on October 19.

Koh has been remanded and his bail stands at $1.5 million

Understanding Stock Market Risks - Financial Fraud Risk is real!

Read? Understanding Stock Market Risks - Updated

Luckily, it is just a minor fraud. What if it is a bigger one, SPH stock price surely kena hit. Financial fraud risk is real and can be hard to prevent it from happening.

---------------------------------------------------
SPH VP sacked for receiving illegal payments, misappropriating shopping vouchers


SINGAPORE: Singapore Press Holdings Ltd (SPH) said it has dismissed Mr Peter Khoo Chong Meng, a senior vice-president in the English & Malay Newspapers Division, after he voluntarily admitted to receiving illegal payments and misappropriating shopping vouchers handled by his Editorial Projects Unit.

These vouchers were intended for branding and promotion activities of The Straits Times, which his unit organises.

Mr Khoo, who has served 22 years in SPH, has made restitution of S$196,500 for the payments he admitted to receiving illegally and for the vouchers he misappropriated.

A police report has been made and investigations are ongoing.

Mr Khoo also chaired the organising committee which coordinates events and activities to raise funds for The Straits Times School Pocket Money Fund (STPMF). He has been replaced in this role with immediate effect by Ms Bertha Henson, Associate Editor of The Straits Times, who will also head the Editorial Projects Unit.

The Straits Times School Pocket Money Fund is administered by the National Council of Social Service (NCSS). SPH said in the statement that to the best of the company's knowledge, none of the donations made to the Fund has been misappropriated.

Mr Han Fook Kwang, Editor of The Straits Times, said: "This is a big setback for us. While we do not believe the STPMF was involved, I would like to assure our many donors and supporters that it is our top priority to maintain the integrity of the Straits Times School Pocket Money Fund."

Ms Ang Bee Lian, Chief Executive Officer of NCSS, said: "NCSS has in place administrative and audit processes including the engagement of external auditors to ensure that the STPMF has been appropriately disbursed to Voluntary Welfare Organisations for the clients."

- CNA/ir
--------------------------------------------------------
This one is the biggest one so far but someone, somewhere in Singapore will one day break his record

Singapore's largest commercial fraud case. APB's former finance manager Chia Teck Leng had swindled four foreign banks of $117 million between 1999 and 2003 by faking documents in APB's name and forging top executives' signatures. The banks were under the impression that they were lending money to APB when, in fact, it was being siphoned off by Chia.


Chia claimed he blew more than half of what he siphoned - $62 million - in casinos around the world, before being convicted and sentenced to 42 years' jail in 2004.