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A security guard repeatedly asked a Reuters reporter to leave before eventually finding a representative, who would not provide a business card but gave his name as Jevin He. Mr. He said he was “not in a position to answer” questions, and calls to headquarters have not been answered.

Some of the worst breaches may be at the auditing and accounting level.

“It is no secret that we have not been able to inspect all of the non-U.S. firms we are required to,” PCAOB chairman James Doty told the Council of Institutional Investors on April 4.

At the same meeting, SEC Governor Aguilar raised the issue of how companies are raising capital, a situation he said he finds himself “increasingly concerned about.”

“PCAOB-registered accounting firms based in the United States audited 74 per cent of the Chinese reverse merger companies, while China-based registered firms audited 24 per cent,” the agency said in March.

Top officials from both the United States and China concluded their once-a-year Strategic and Economic Dialogue meeting in Washington on Tuesday, saying they would work toward enhancing “mutual trust and strive to reach agreement on cross-border oversight co-operation.”

Efforts to inspect Chinese auditing firms have met resistance from Chinese authorities, but Mr. Doty told Reuters this week he expected progress this year, in part because the various problems with Chinese firms had shown authorities in Beijing the importance of credible auditing. “We will make progress in getting access to those audits,” he said.

Drew Bernstein, the co-managing partner of Marcum Bernstein & Pinchuk, a New York-based audit and accounting firm, said he sometimes has to go to extremes to get Chinese company officials to understand the ramifications of shoddy auditing and accounting.

Instead of bowing to the intransigent company chairmen or boards, he explains that if they don’t cooperate and own up to problems, he will be forced to tell the local authorities of alleged fraud, therefore making it a Chinese problem.

Switching the jurisdiction changes the calculus. Executives have been executed in China for fraud and corruption.

“A lot of the answers, you know, get down to dealing with the Chinese in a Chinese way,” he said.

Fears for personal safety are not limited to short-sellers like Carson Block.

George Qin, head of the Chinese audit practice at Houston-based MaloneBailey, says he has to think twice now about future travel within China.

According to documents filed with the SEC, MaloneBailey resigned its auditing duties from four companies that have subsequently been halted for trade on the NYSE Amex and Nasdaq stock exchanges.

The companies are: China Century Dragon Media, China Electric Motor, China Intelligent Lighting, and NIVS IntelliMedia Technology Group.

“I’m afraid for my personal safety in some areas of China,” Mr. Qin said.

He told Reuters that some companies colluded with employees at major Chinese state-owned multinational banks to provide false bank statements, though he would not specify which ones.

In interviews with various actors in the field, there was a lot of finger-pointing about competitors, to which Mr. Qin said: “Are they (competitors) all fraud free? We found the fraud by ourselves. If there were more serious firms there would be more fraud discovered. Where there’s one roach, there are many roaches.”

Short sellers like Left will say he and others on this side of the markets are just following up on information and data to help explain things that “just don’t make sense.”

“Me? I’m out to make money. I don’t consider myself a short seller. I consider myself a market opportunist. Would you be asking me this if I was writing about stocks that I take a long position in? People are so ready to hate short sellers,” Mr. Left told Reuters.

Many agree the presence of short sellers and the research they provide are useful. As soon as they attest to that, though, they point fingers at unidentified “dishonest” short sellers operating at the behest of hedge funds looking for an edge.

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