July 7, 2020
"The SECs mission is threefold: protect our investors, preserve market integrity and facilitate capital formation."
With all due respect, please stop talking about protecting investors interests and actually do it.
While it is understood that the SEC and PCAOB may have difficulty working with emerging markets companies and governments to adhere to US standards or to allow US audits to take place and that this results in greater risk and lower chances for investor recourse, what is not understood is why we give many companies as much latitude as we do.
For example, when there is adequate proof whether definitive or multiple forms and degrees of circumstantial evidence the SEC and PCAOB should proactively take enforcement action, such as trading suspensions and delistings. Should either organization choose to be especially generous, give the company a chance by putting the burden of proof on them to disprove the evidence, within a short but reasonable timeframe.
Further, when there are public charges against a company, the public should be made aware of such investigations as they are launched, for the sake of market transparency and fair market pricing. Pricing will reflect risk/reward appetites of investors, and will adjust in real-time.
The SEC and PCAOB should be taking this approach right now with the company GSX. There is a tremendous amount of circumstantial evidence pointing to the Chinese NYSE company being a digital house of cards. The burden of proof should be on GSX to immediately disprove the claims, or face delisting from US markets.
GSX also seems to be manipulating their stock price, with no rhyme or reason for its price continually going up to new all time highs almost on a daily basis and a valuation thats 720% greater than its closest, much more successful competitor, EDU.
On days that the overall market, tech stocks, even every single Chinese education tech stock goes down, GSX goes up. GSX also has huge buy orders in the final minutes of trading and pre-market nearly every day. On the very few down days, GSX recovers nearly all of its losses in the final 60 minutes of trading.
The only updates about GSX have been a downgrade by Goldman Sachs and two additional fraud reports (I believe there are 14 or 15 at this point). Theres something very odd about how this stock is behaving and it should be looked into right away.
Chinese investors are notorious for pumping stocks and not playing by the rules. Would you put it past a company that is engaging in fraud and wont face US laws to be pumping their stock to squeeze out shorts?
Its for these reasons specifically, that we have little to no recourse that we need to be proactive in addressing fraud accusations and odd price movements for Chinese and emerging market equities. Too much money has been transferred illegitimately from the US economy to the Chinese at this point, and the SEC and PCAOB are the entities expected to put a stop to this.
Please do so by making an example of GSX before GSX makes an example of how weak our regulatory system is. There is more than adequate evidence at your fingertips, boxed, wrapped, and with a bow on top.
Thank you all for your time.