Block said it was in disarray, with broken machines and mountains of cardboard rotting outside its factory grounds. But then Carson Block, an American short-seller with the famed firm Muddy Waters Research, researched Orient Paper on behalf of his stockbroker father. In the film, Pennsylvania hedge fund manager Dan David recalls making 500% on these companies, yanking him out of the 2008 hole. Once the stocks rose high enough, the banks would cash out and leave their investors holding shares that often plummeted. The banks’ analysts and salespeople, like Matt Wiechert of Roth Capital Partners, would hype the Chinese companies to investors. ![]() The investment banks made fees for bringing Chinese companies to North America, but their real payday came when the big banks sold shares (granted as part of the deal). Investment banks would woo hedge fund managers and bankers at decadent, boozy bashes, where celebs like Billy Idol and Henry Kissinger entertained. Read: When following smart money is stupid And the best part? “No one asks any questions,” says one business journalist in the film, which is critical of both the SEC and the big accounting firms. Suddenly, Orient Paper was trading in America. The shell company no longer operated but legally existed on the exchange. An active Chinese company would “merge” with a dormant shell company already listed on the NASDAQ, for example.
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