[phatfish]

Short sellers seem to be a much more reliable indicator of something corrupt going on in a company than the big auditors. You could be forgiven for thinking they are in on the scam and working to keep the director's bonuses rolling in right until the final months before a company collapses.

I suppose governments couldn't ignore the obvious forever and they are being forced to actually doing their job now.

In the UK Carrillion comes to mind as a big one, and more recently Thomas Cook. There have been many others.

https://www.parliament.uk/business/committees/committees-a-z...

[solarkraft]

One notable exception appears to be Tesla. But is it being shorted by the same (apparently quite rational) people?

[phatfish]

I suppose there are a lot of reasons to short sell a stock, and as a laymen I always felt it was just traders manipulating the stock market casino at the cost of real businesses.

Not sure who was/is shorting Tesla, maybe they just don't like Elon, or maybe there is something going on.

With the "big four" accountants/auditors seemingly being corrupt, and governments ignoring this, or worse being complicit, how else can the financial health of a company really be known?

It now comes down to a hedge fund with the skills to do so realising a company is cooking their books, shorting it as quietly as possible. Then they drop their PDF on Twitter and watch everyone else get screwed.

Rather than EY/KPMG etc. doing their job and warning investors/regulators before the problem gets so big it crashes the stock.

Another example, NMC Health being shorted by Muddy Waters at the end of last year, a FTSE 100 company with EY as the "auditor" since 2012.

https://www.telegraph.co.uk/business/2020/02/17/nmc-health-f...

[hef19898]

My understanding is, that short sellers look for reasons to assume a company is over-valued (for whatever reason), calculate an more reasonable evaluation and then short sell for that value.

Doesn't mean it is always fraud. Oesn#t mean they are always right. But more foten thn not, they seem to be very rational about it. Given the amount of money they are moving around, they better are.

For Tesla, it means that, more likely than not, it has nothing to do with Elon. And more with things like:

- Is Tesla a car manufacturer or a "tech" comapny? If the former, it is over-valued, if the latter, it is much less so.

- Some, I'd say questionable, business deals. E.g. the Musk family bail out of Solar City, the sometimes not so clear intercomapny lending between Musks enterproses (SpaceX, Tesla,...)

- Musk seeming lack of focus on Tesla, he does work drectly on a lot f other ventures in parallel

- Musk's pubic behaviour, which seems of compared to other CEOs. Especially in the car industry, which has again a ot to do with the first point

- Corporate governance, that seems to be abit strange in Tesla's case. Normally, when publicly traded comapnies have that kind of trouble with the SEC, it is a bad sign.

Sure, Musk plays a role in all of that. But liking or not liking him is, IMHO, the least reason why someone would put millions at the table to short Tesla.

Regarding the big four, so. If you think back to the time before Enron and SOX, it was a lot worse. Since then, the Big Fur had split up operations, auditors have to change every coupe of years.

That being said, they could a lot stricter. I was way to deeply involved in one audit once, and I wouldn't have signed of balance sheet. Well, they kind of did only bcause the subsidiery I was involved in contributed a tiny fraction and everthing else added up. But still.

Also, Wirecard is a German company, so a lot of the SEC rules don't apply. Doesn't make it any better so.

[itsoktocry]

If you think Tesla is an exception, perhaps you should revisit your assumptions. Their story is not over,it is just beginning.

These stories all work the same way: "Obviously there is no fraud here, this is a short seller scam!" to "this company was always a fraud, obviously." Most people have their head in the sand on the way up, and pretend they knew all along when it implodes.

Every major fraud looks that way.