LDK Warns Investors of Tightening Margins

I wonder that Greentech media still publish the opinions of very incompetent analysts Pichel and Shrestha, who constantly bash negatively LDK, mind its margins, ..believe that .... do no see that… Pichel, as former clerk in Lipton company, became an expert in solar industry… Upgrade companies who have worse results (margins…) than LDK, typical example is SOL, but also others… This is the shame, and Greentech media should keep at least some objectivity, maybe ask analysts from Needham, UBS, ...

You may be interested to know that LDK CEO Xiaofeng Peng will be presenting at the Renewable Energy Finance Forum-Wall Street (http://www.reffwallstreet.com), along with other top executives from companies like First Solar, UBS, Acciona, BrightSource, JP Morgan, BP Alternative Energy, etc. Last year, over 40% of attendees were CEOs, CFOs or Managing Directors.

Either Greentech Media is a completely irrelevant outfit without any basic understanding of the photo-voltaic industry (let alone insight), or Greentech actually willingly participates in the scheme of the Wall Street gangs who have enjoyed manipulating the stock prices of LDK Solar since last fall with all kinds of bogus accusations, concerns, and predictions without any convincing data or reasons.

Yes, anybody can have his or her opinion, but that is not financial analysis as we know it.  Pichel, Shrestha or Tang are entitled to their personal opinions which run directly against all the solid performance data delivered by LDK Solar. If Greentech Media deliberately ignores this plain and simple fact, there is no reason for anyone to read the articles at all.

Does the author Rachel Barron know whether or not analysts’ employers, Goldman Sachs, Piper Jaffray or Lazard, are members of firms who are listed in class-action suit against LDK, filed in October 2007? 

Regarding various downgrades of Goldman and Piper Jaffray:  There is a potential conflict of interest and APPEARANCE OF IMPROPRIETY, in claiming to represent the interests of private clients and having ‘duty’ to inform them of adverse developments (which is the basis for timely downgrades), while those same clients are listed in suits against LDK.  It could also suggest mischievous intent, if they are acting to leverage downgrades, while they themselves, are companies potentially listed in suit (alleging fraud) against LDK. 

http://biz.yahoo.com/pz/071010/128440.html

The downgrades are a piggy-backing of sorts:  Positively or loosely intended to manipulate or stimulate investor uncertainty, and remind investors of the language previously filed in lawsuits.  You will note that many of the more controversial downgrades occurred in December 2007 around the time when the suits’ cut off date expired, for when disgruntled shareholders (like Piper and Goldman) could or did enter into the suit; Dec. 10. 

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Approximately December 14-16, 2007 LDK management responded to the suit, issued news release about the independent audit conducted by, Simpson Thacher & Bartlett LLP; a Big Four accounting and consulting firm not associated with LDK’s external auditors or its outside experts.

Audit amounts to substantial argument to the allegations. Independent audit of LDK returns blow to lawsuit rendering it moot or
potentially a non-issue.  Dec. 17 articles published by Forbes and by Thompson Financial news and other outlets:

“LDK Solar’s Sunny Audit” (Forbes),
“LDK Solar’s Excellent Audit” (Thompson Financial News),
“LDK Solar Audit Allays Investor Fears” (Sarina Penn, TheStreet.com),
“LDK board inquiry finds no inventory discrepancies” [TEL AVIV (MarketWatch) ] 

After stock goes up on the news, folks at GS and PJ sour, become grumpy and move to defend potential claim, or, see opportunity for large gains.  Posturing occurs to potentially load up on short position, prior to stimulating massive sell off.  Plans set forth to potentially participate in massive sell off, in after hours trading, when volume is weakest and stop limit barriers are few and non-existent.

Set up.  Off record.  In effect.
December 19:  Check left. 
Check right.  All systems go.

Stock is downgraded from $65-72 range, to $21-30.  Substantial downgrade of this nature, suggests fraud or strongly implies flawed accounting.  You will recall how GS used “conviction sell” notice to stimulate panic and investor uncertainty; within days of positive reports about the audit.  They are one of the only firms who used this tactic in concert with recently relaxed short-selling laws.

A downgrade of this nature (for example 65% or more off present value), is typically reserved for companies who have been formally indicted or charged with multiple counts stipulating accounting irregularities or falsehood in reporting inventory.  Historically, downgrades of this proportion are also reserved for companies who have recently been stormed by the FBI, 25 or more agents descending, all computers seized, file cabinets on dollies, trucks backed up to corporate headquarters, etc.  A downgrade of this amount, without stating what percentage of inventory is in question or what percent of business is perceived to be affected, can be noted as irresponsible. There is potential for a mischievous element to be harboured here.

Approximately December 19:  In interviews with Jesse Pichel, reporters at Forbes and other new agencies closely link Pichel’s downgrade (based on what they perceive as careful analysis - relating gross margin and price for scrap silicon, etc), with previous allegations of former financial controller, Charley Situ, that the company had a 250-ton inventory discrepancy and poor financial controls.  When Pichel is citing gross margins, scrap silicon, and discrepancies compared with other companies this is similar to saying “inventory;” or LDK’s inventory is not what it seems.  In essence:  Imputation of crime.  ... Linking arms with Situ, it is akin to reminding investors that a suit is outstanding and the suit plainly says fraud and concealment (which have turned out not to be true).  Situ is often named in or sometimes cited with news relating language in the suits.

Pichel and Situ were close buddies during this time, and shared many confidences and one to one dialog.

For professional misconduct and conflict of interest to be true, a malicious element might need to be present; for example, retaliation or revenge. Was Piper Jaffray or Jesse Pichel previously rejected by LDK?  Was Goldman Sachs Group previously confiding with LDK management and trying to gain their business?  Was Goldman Sachs Group rejected by LDK or Peng, at any time in LDK’s young life as a publicly traded company?  Do these rejections have anything in common with Charley Situ, for example, does Situ share a similar rejection by LDK, as Goldman, Piper Jaffray or Pichel? 

These are important questions a lawyer might ask, in determining if malice or mischievous acts occurred or can be effectively argued in a court of law.  Lets set that aside for a moment and go on.

As mentioned earlier, the downgrades are a piggy-backing of sorts:  Positively or loosely intended to manipulate or stimulate investor uncertainty, and remind investors of the language previously filed in lawsuits.  In essence: PJ, Charley and GS are manipulating price. Manipulation of share price is dependent on prompting memory of previous allegations of fraud and
concealment.  For lack of a better term, lets call this price manipulate “a double dip.”  Spread out a chart of LDK and see if any price manipulation is ongoing or manifest in the short life of the publicly traded company.

Also note, Goldman and Piper may know that there is little or no substantial proof against LDK.  The cut off date was December 10, but, efforts went forth since Oct. 2007.  It was possibly and likely known, that all evidence gathered to this point and for the last couple of months, was hearsay.  This would be to acknowledge that the suit in all practicality, had no other leg.

Indirectly the suit is calculated to harass.  They never intended to prove anything.

December 19.  Suit is hardly off the ground.  Audit is already out, blowing the doors off our suit!  Did this compelled the need for Goldman and Piper to unite in prosecuting the case in the press, and making downgrades so they could profit off their recently established short positions? 

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Certainly questions now manifest to other finance professionals and those who hold up higher standards of professionalism for various financial associations in the United States.  A stable market is better for investors and the investor community.  Lets face it, there ARE other finance professionals who don’t do mischief, to specifically manipulate share price nor take a double dip at the expense of unsuspecting shareholders and the common investor community. 

Regarding higher standards of professionalism:  Goldman and Piper should not be allowed to issue alarmist downgrade (with a conviction sell notice)  when it is known they are parties in a suit against LDK, or, they have clients who are listed as parties in a suit against LDK.

There is an essential question raised about CONFLICT OF INTEREST.  But not conflict of interest by itself, conflict of interest occurring with the APPEARANCE OF IMPROPRIETY.  When taken together in its entirety it is enough to technically fit the definition of PROFESSIONAL MISCONDUCT.  If there is deception involved, dishonesty or deceptive business practice, one has to ask where is the intent to defraud originating in the first place?

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Since Goldman and Piper are acting on private knowledge of Charley Situ, and knowing that after several months the only evidence they have is hearsay (which they know will not carry the case), they might have other motives that need to be considered here:

What they may actually be trying to do is orchestrate odium or contumely and direct it, against LDK, for reasons of taking prestige from LDK and keeping it for themselves; for reasons of shorting the stock heavily and profiting in the potential falsehood; possibly gaining in other regards, as novice journalists and financial professionals, falsely perceive them to be accurate and revered analysts. 

They may not win in the suit, but by god, hell-fire, an omission of important details, a downgrade or two, some damnation or even a false imputation of a crime (such as fraud), and a “conviction sell” notice thrown in for extra kick down effect ... they can win by shorting the stock and telling associations before their downgrades, to do the same.

For purposes of shorting a stock heavily, associations are what Piper and GS may loosely refer to as ‘‘clients.”

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Because journalist such as Rachel Barron or Jennifer Kho, are possible naive or possibly recent graduates of university, or possibly desire to be ‘in’ with analysts they perceive as prestigious, they might be prime candidates for helping to dupe the public, because they might not be competent in following the real story.  All they see is what Piper Jaffray and Goldman Sachs wants them to see, and the real story is lost in the zeal to report the superficial appearance of facts; in other words the one-dimensional view of Goldman and Piper analysts.  This is really a sad testament to journalistic integrity.  If I knew the university of where the two reporters graduated, I would send copy of this comment and initial report to all their college professors and ask them if their mission was to put out nitwit reporters on Wall Street.  I would ask if they themselves were paid to send them out like sheep amongst wolves and ask if such an journalistic alliance actually helps American investors or if they think it hurts the free market.  If anyone knows the university by name, please email me (JavaScript must be enabled to view this email address).  I will promptly send copy of same, and post the reply or replies here.

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A standard of professionalism governs the industry of financial advisors and companies who operate in it: 

Goldman Sachs Group and Piper Jaffray, should not be allowed to freely and salaciously make a downgrade when it is known they are parties in a suit against LDK, or, they have clients who are listed as parties in a suit against LDK.

There is a conflict of interest in (Piper or Goldman analysts) claiming to represent the interests of private clients and have a ‘duty’ to inform them (via substantial downgrades), while those same clients are on listed in suits against LDK.  It is a clever deception.  But deception of this magnitude invokes an old expression:  Two wrongs do not make a right.

Such deception were it carefully considered, might not pass mustard in front of a bench, with qualified regulators in the room.  Some regulators work hard where they can.  If they put this in front of bench the Court might feel obligated to rule that deception of this magnitude is not tolerable:  It creates an unstable market for all investors and caste a pale of distrust, where many professionals have striven and devoted their whole lives to restore and protect investor trust.  The later being more important, having greater significance to the welfare of our markets.

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There is a certain ignoble quality in downgrading a company, and issuing a “conviction sell” while knowing that there is no evidence against them that will stand up in a court of law, and knowing this, then suggesting inventory is in question, that the case is not yet settled and prompting reminder of the language used in the suits against the company.

To this day, no evidence has been presented to substantiate claims against LDK.

Since that time, the SEC has reviewed the independent audit.  LDK has been cleared of wrong doing.  Goldman Sachs and Piper Jaffray have not.

Reference:
http://biz.yahoo.com/pz/071010/128440.html
http://biz.yahoo.com/iw/071009/0313283.html
http://biz.yahoo.com/iw/071012/0314960.html