West Palm Beach (HedgeCo.net) – James Chanos, Chairman of the Coalition of Private Investment Companies (CPIC), said in response to the SEC’s five proposed rules put forward to curb short-selling, "Rebuilding investor confidence should be the primary objective of any new regulatory effort and it is not clear that today’s proposals will meet that simple goal."

The SEC voted unanimously to seek public comments on all of the proposed rules intended to limit short-sales.

"Skeptics, independent research and critical analysis must continue to play a vibrant role for our markets to grow sustainably and with integrity." Chanos continued, "Short selling is integral to improving the efficiency of markets and enhancing market quality through narrower spreads, deeper liquidity, less volatility, and greater price discovery.

"In recent years, short-sellers have publicly warned the marketplace about the dangers at AIG, Lehman Brothers, and Enron, as well as sounding the alarm over the credit ratings agencies, non-bank subprime lenders, and credit insurers. Proposals to inhibit short-selling have the effect of limiting this vital market-based antidote to corporate fraud and speculative bubbles, and must be carefully weighed against the clear harm that comes from ill-conceived government intervention in basic market functions,” Chanos concluded.

CPIC is a coalition of private investment companies whose members and associates are diverse in both size and investment strategies.

Alex Akesson

Tags: accredited-investors, corporate fraud, credit insurers, critical analysis, government-intervention, independent research, investment strategies, investor-confidence, james chanos, lehman brothers, market quality, palm-beach, price-discovery, private investment companies, regulatory effort, short-sellers, speculative bubbles, vibrant role

Forbes – Private equity investors in Asia are increasingly fearful of fraud within their portfolio companies as the global economic downturn puts mounting pressure on firms in the region.

The global financial crisis has already caused significant damage to private equity-backed companies in Asia, with shares plunging and demand drying up for everything from electronics to manufactured goods.

But corporate fraud, a scourge that can be more prevalent and harder to detect in emerging economies such as China and India, can quickly turn a bad private equity investment into a disaster.

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Tags: asia, china, corporate fraud, disaster, economic-downturn, emerging economies, forbes, global financial crisis, india, portfolio companies, private equity investment, private-equity-investors, scourge