beware False profits
Wall Street analysts are vexed at every turn these days by the fear of offering compromised comments and cheating hard-done-by shareholders. China looks to be taking the more direct approach to reigning in dodgy profit forecasts.
Yesterday, the China Securities Regulatory Commission issued tough new guidelines that promise to mete out punishment to listed firms that miss their profit forecasts. Any company now missing its numbers by between 10 per cent and 20 per cent must make a statement accounting for its failure plus a grovelling apology to shareholders. More than 20 per cent below and the commission can investigate.
It looks to be a matter of profits by regulatory dictate. There is, however, no penalty for making more than you promised.
So now you have it. Profits are enshrined in law. What a wonderful market this is!
When a David sues a Goliath, you would assume that the David in question would be playing for big stakes. Which is why a report about Zhu Yanling's suit against Nestle on the People's Daily website caught our eye.
Ms Zhu, described simply as a '33-year-old woman', sued Nestle after buying a product that, according to Greenpeace, contained unlabelled 'genetically modified elements'.
Ms Zhu flew to Switzerland to ask Nestle executives for more information but came back empty handed. So she sued in a Chinese court - demanding all of 6.8 yuan in compensation.