or tiny offices scattered round the world, from rural Texas to Beverly Hills and
a suburb near Australia’s Bondi Beach.
Some have never even been to China; most don’t speak or read
Chinese. And yet in the past nine months, this small group of “short sellers”
has published research exposing accounting fraud at a series of Chinese
companies listed in the United States and Canada, and made as yet unproven
allegations against a whole bunch more.
As a result they have scuttled a once hot sub-sector of the American capital
markets.
In a number of cases they claim to have made a killing by shorting those stocks – placing a bet that the
shares would fall in value – before publishing the research. They insist they
operate independently but are clearly influenced by one another’s ideas and
tactics.
Altogether, they have been the catalyst that has wiped more than $21 billion
off the market value of Chinese companies listed in North America. The sell-off
has led to big losses for some very prominent investors, including hedge fund
manager John Paulson and former AIG CEO Maurice “Hank” Greenberg.
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