Enron, China-style?

(Bloomberg) Jim Chanos, the hedge-fund manager known for predicting Enron Corp.’s 2001 collapse, says he’d short sell Chinese companies listed in the U.S. if it were feasible to borrow shares to open the bearish positions.

The Bloomberg Chinese Reverse Mergers Index has plunged 41 percent since Nov. 8 amid speculation financial statements from companies such as China MediaExpress Holdings Inc. (CCME) can’t be trusted. The concern intensified this week after Longtop Financial Technologies Ltd. (LFT), whose initial public offering was underwritten by Goldman Sachs Group Inc. and Deutsche Bank AG, said its auditor quit because of false records.

“Almost all of them have odd looking financial statements,” Chanos, the president and founder of New York- based Kynikos Associates LP, said on Bloomberg Television yesterday. “We wish we could borrow almost all of them.”

The Securities and Exchange Commission began an investigation last year into the use of reverse takeovers, in which a closely held firm becomes public by purchasing a shell company that already trades. The cost to bet against the stocks is keeping Chanos away. ............(more)

The complete piece is at: http://www.bloomberg.com/news/2011-05-24/chanos-says-hedge-fund-may-not-be-bearish-enough-on-chinese-real-estate.html