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Hedge fund MR Capital sees opportunities in Chinese reverse mergers

Thursday, February 16, 2012

From Komfie Manalo, Opalesque Asia:

Mohannad ALRashoudi, Founder and fund Director of hedge fund MR Capital Management, which is managed by the Cayman Islands-based Global Consumer Loyalty Fund Ltd., sees opportunities in the Chinese reverse mergers or "reverse takeovers" (RTOs) but advised investors to conduct due diligence before dipping into what he described as the "Sino Curse."

ALRashoudi said in an interview, "Maybe it’s too late to talk about false opportunities in Chinese reverse mergers, but it could actually be too early ahead of the true opportunities. The Sino Curse drove its entire universe down. In general terms, market reaction can well be justified, especially when the subject is accounting fraud and the worst case scenario isn’t worse enough."

ALRashoudi was reacting to the current impasse between U.S. Securities and Exchange Commission and Chinese regulators about auditing procedures concerning U.S.-listed Chinese companies believed to be involved in fraud. These Chinese firms are able to fend off U.S. accountants from conducting audits, hiding from a Chinese law that forbids disclosure of "state secrets."

According to the hedge fund executive, this stalemate should be resolved quickly and added that no company should cover anomalous trading and use sovereignty to hide their insufficient financial transparency.

Because U.S. accounting firms are barred from opening their own auditing of......................

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