July 8, 2020
Hello SEC Staff Roundtable,
I am writing as an investor, hoping to add an outsider, individuals point of view. After viewing The China Hustle for the first time earlier this year, I began to research the steps our government had taken to correct the easily corrupted system. Who benefits from allowing, and continuing, covert accounting practices that lead so easily to fraud? I am guessing that it is more than just the investment bankers that create the deals.
The optics from the outside are discouraging. For brevity, I will address one company, GSX Techedu. I see both long and short investors agreeing on three things: 1. $GSX is thoroughly fraudulent, 2. The SEC will not put an end to the practice, and 3. No one in China fears any penalties of any kind. They will continue with impunity. While the short-sellers see an injustice, the longs are fine with it, as long as the price continues to rise.
The most troubling aspect of this, and other Chinese listed stocks, is the way this systems further erodes our belief in the rule of law. The lack of resolute change in the system degrades our hope and trust in government agencies that profess to protect us from predators and fraud. From the outside, it appears everyone is protected except retail investors.
Please take decisive action against fraud and corruption—decisive—not three years to cover up the hustle, by any means necessary.
Thank you for your time