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Two American hedge funds claim that researchers that they sent to China were harassed and arrested by police.
The Chinese government is allegedly harassing and arresting researchers sent by US investment firms to look into Chinese companies that are traded on American exchanges, according to a report from the Pittsburgh Tribune-Review.
At least two hedge funds have reported their researchers may have been threatened or arrested in China. From the Trib:
Two American hedge funds, Absaroka Capital Management LLC and EOS Holdings LLC, also reported their researchers in China were arrested and/or threatened with death by thugs, police or both. The status of the Absaroka researchers is uncertain; three EOS workers were arrested and detained for five days. Though all three were released, two of them are under government-imposed travel restrictions.
If the arrests are indeed true, it signals that China is making efforts to up the reputation of its companies overseas by stopping overseas investigators from finding problems with their businesses.
As many know, many Chinese companies listed on American exchanges have been the victim of short-selling after reports of fraudulent business activities they've engaged in are made public — Muddy Waters' disastrous report on Sino-Forest is probably the best example of this.
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