There's a developing story around Sino-Forest Corporation (TSX: TRE).

[randomness]

Muddy Waters Research accuses it of being a "a multi-billion dollar ponzi scheme", "accompanied by substantial theft".

John Hempton observes:

There is a cottage industry in doing forensic analysis of Chinese frauds. I have analysed many and put only a smattering on the blog.

But I have never seen anything this big or this amazing.

Read the report. I am in awe.

Felix Salmon explains:

What’s certain is that in the wake of all this, either Sino-Forest or Muddy Waters is going to lose all credibility: one of them is a multi-million-dollar fraud. Muddy Waters is short Sino-Forest, of course. If Sino-Forest turns out to be a slightly dodgy Chinese forestry company and not a Ponzi scheme, you can be sure that Muddy Waters has been covering its short all day and has banked a huge amount of money by putting out extremely misleading material. On the other hand, if Muddy Waters is right, then Sino-Forest is toast.

Comments

[achinhibitor.livejournal.com]

True, I don't expect McArdle to investigate it, but I do expect her to understand what information is available. But journalists ... Let's just say the Boston Globe regularly confuses "million", "billion", and "trillion". I wouldn't send their reporters (or editors) to balance my checkbook, much less investigate a sophisticated fraud.

[achinhibitor.livejournal.com]

Maybe I'm wrong. The Toronto Globe and Mail had a intelligent article on Sino-Forest: http://www.theglobeandmail.com/report-on-business/key-partner-casts-doubt-on-sino-forest-claim/article2066110/