Morgan Stanley (NYSE:MS) Backing up Stocks of a Chinese Company


Morgan Stanley (NYSE:MS) has aided Tianhe Chemicals which is a Chinese company to sell stocks of around $654 million in a public offering this June. But certain crucial discrepancies in financial records accessible by the public and statements that Tianhe had made to its investors were reported by The Associated press. All this disparity on the part of Morgan Stanley (NYSE:MS) brings to light the role of this banking giant in guiding, encouraging and ultimately protecting Tianhe before it became an international stock offering and even after it.

With all this involvement, Morgan Stanley (NYSE:MS) & Co LLC and its underwriters such as UBS AG, Merril Lynch and the Bank of America could be held liable to judicial concerns. The financial markets of China are now making their way to the world and many American companies are rapidly buying stocks these companies and adding them to their stock portfolios by mutual funds and pensions. But investors are not completely aware of the backgrounds of these companies so they rely mostly on banks such as Morgan Stanley (NYSE:MS) to act as an intermediary between them and the Chinese companies so that the business would be done smoothly.

Tianhe Chemicals Group Ltd. is the manufacturers of various chemicals and lubricants which are used to strengthen touch screens and are also used to help in fighting fires. The Associated Press decided to present their review on the company after it was accused of illegal deals. Tianhe discards this but its shares have fallen by 39% since then. The Associated Press has found that revenues that were cited in the data stored in public and government sources were reported to be only a fraction of the revenues that were reported by the company to all the foreign investors, i.e. the amount was actually $106 million and not $684 million.

This financial data was bought by the Associated Press in the subsidiary companies of Tianhe from people who also work for the Commerce Department of the U.S. It has been found from the records and commercial data from a state-owned enterprise has identified an antecedent of Tianhe to be a property of government organizations in China even though the founders of the company claim that they own it.  This is important because the previous company had transferred its assets to a subsidiary of Tianhe for ‘nil consideration’ five years ago in 2009 even thogh Chinese laws demand that government property should be sold at a reasonable price.

Tianhe’s filings show that one very prominent consumer i.e. the Shanghai Xidatong International Trading Co. Ltd. has bought chemicals which are worth of around  $100 million each year from Tianhe.  According to the official business data of the company that was bought by AP said that the annual revenue of the company was less than $6 million in 2012, and the net worth was also lessened at the end of 2012. Joseph Lee, who is the Chief Financial Officer of Tianhe and also a former employee of Morgan Stanley (NYSE:MS) said that the equity team had analyzed Tianhe thoroughly.