
You Can’t Hide from the Corporate Cops - bspn
https://www.bloomberg.com/view/articles/2018-06-21/you-can-t-hide-from-the-corporate-cops
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alfredallan1
At the risk of skipping a lot of (extremely entertaining - a highly
recommended read about the innards of corporate shell structures amd
shareholder rights) detail, the story boils down to 1) the common observation
that laws are only as useful to you as your ability to get them enforced, 2)
sometimes even very rich and able people can have a lot of trouble enforcing
laws, in a rightful case, against someone determined who knows to cleverly
play the legal system.

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ethagknight
And 3) when you are buying a position in a company, take some time to get to
know what you are buying. A half dozen shell companies through the BVI with no
assets until you get to Hong Kong? I might dock that one a bit

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alfredallan1
Indeed, one wonders what sort of due diligence the investors conducted.. I
suspect (since convoluted shell structures are not (at all) uncommon in
practice) it could have been that they weren’t actually aware of the full
potential ramifications, or to the extent that they were, they didn’t imagine
it’d go to the (literally) extreme scenario. In any case, a tale of caution
this certainly is.

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mathattack
There are plenty of Lenny stock punters who gamble full well knowing they
don’t know what’s going on underneath. They expect larger returns in exchange
for the added risk.

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cinquemb
"Local-currency emerging-market bonds sound like they’d be pretty illiquid.
Packaging them into an exchange-traded fund might make them seem more liquid,
but if someone wanted to get out of a big ETF position all at once, they might
find that the liquidity isn’t there. By selling the ETF they’ll cause a fire
sale of the underlying bonds. Right?

And every actual event undermines it! The bond index underlying EMLC was … um
… up 0.45 percent yesterday. Obviously a $321 million bond trade is not a
particularly big one, but still, it’s a record for this ETF, and it just
didn't have a whisper of an impact on bond market liquidity."

Only if you are assuming that who ever is holding the bonds now will want to
just outright dump it and thus exacerbating the 3 month trend on that
particular ETF… not to mention you have to ignore that there could be
liquidations in portfolios (FX/Cash/Swaps/Equities/ other derivative
contracts) going on to re-balance/cover losses as well as ignoring how central
banks from India to Indonesia have been quite vocal in their worries…

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vilhelm_s
Or can you? If they ignored the suit so far, then there's probably a good
chance they'll just stop travelling the the U.S., and then we'll see if
Chinese courts enforce this or not...

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rmah
Chinese courts and law enforcement won't enforce an arrest order from a
subsidiary Deleware court in a foreign country.

Just as a US courts and law enforcement wouldn't enforce a Chinese provincial
subsidiary court order.

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vilhelm_s
I guess it's not _entirely_ unprecedented (apparently there is exactly one
example in each direction), but yeah, I think they will not be arrested any
time soon.

[https://www.chinalawblog.com/2014/03/enforcing-china-
court-j...](https://www.chinalawblog.com/2014/03/enforcing-china-court-
judgments-overseas-yeah-its-possible.html)
[https://blogs.law.nyu.edu/transnational/2018/04/the-
chinese-...](https://blogs.law.nyu.edu/transnational/2018/04/the-chinese-
courts-enforcement-of-a-u-s-civil-judgement/)

~~~
gpvos
Assuming they were travelling to the US for business purposes, this may,
however, seriously cripple their ability to do keep doing business in the way
they used to.

