# The new Enron - Implications for the market?



## basilio (25 October 2015)

Some members might be aware of the unravelling of the multi-billion dollar Valeant Pharmaceutical Co.  Essentially it looks like re -run of Enron and when one reads what has gone down so far it seems highly unlikely to have a happier ending.

*This is a company that was valued $90billion earlier this year.* Wonder what the impact will be on the markets as it plays out.

Interestingly enough one of the first people to call it out as dodgy was John Hempton from Bronte Capital.  He has a long history of identifying companies  that have doubtful legitimacy, outlining the case and then shorting the hell out of them.

http://brontecapital.blogspot.com.au/



> *Is this an Enron moment for the markets?*
> 
> Date
> October 24, 2015
> ...



http://www.canberratimes.com.au/bus...n-moment-for-the-markets-20151023-gkgnxs.html


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## basilio (25 October 2015)

*Re: The new Enron  - Implications for the market ?*

Had to add a little story that John Hempton (purportedly) told hs 12 year son to explain his work as a short seller of shares.  

Fun interesting..



> *Daddy you are more evil than I thought.*
> 
> 
> ....But then the area our fund is best known for came up. I am a short seller.
> ...



http://brontecapital.blogspot.com.au/2012_04_01_archive.html


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## basilio (27 October 2015)

So Monday came and went and Valeant held a press conference to (try) and bat away the questions surrounding it's marketing and finances.

The hole is getting deeper. Turns out not only did they set up their own captive speciality pharmacy but it seems that Valeant staff worked there under false names. Why is this so ? John Hempton sums it simply 



> So here is the pertinent question: why would Philidor (which is staffed by Valeant staffers using false names) use the name of a two-bit pharmacy to send prescriptions all over the United States including to States where the two-bit pharmacy was not licensed?
> 
> The only explanation I can come up with - and one that the company should address in the conference call - is that they did it because they were getting rejections or audits from insurance payers when using Philidor's name. Hence they used the NPI number of another pharmacy and the payers paid without audit.
> 
> ...




http://brontecapital.blogspot.com.au/

Meanwhile Valeant is trying to get the SEC to investigate the US company that called it out on it's practices.!


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## Tyler Durden (27 October 2015)

This is the first I've heard of it. Wonder why it hasn't been in mainstream media?


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## skc (27 October 2015)

basilio said:


> So Monday came and went and Valeant held a press conference to (try) and bat away the questions surrounding it's marketing and finances.




Thanks for sharing this. A very interesting story. 



basilio said:


> Meanwhile Valeant is trying to get the SEC to investigate the US company that called it out on it's practices.!




I think Sino Forrest tried to sue Muddy Water for exposing it... or something ridiculous like that.



Tyler Durden said:


> This is the first I've heard of it. Wonder why it hasn't been in mainstream media?




Shorting fraud is a pretty specialist field.


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## Tyler Durden (28 October 2015)

skc said:


> Thanks for sharing this. A very interesting story.
> 
> 
> 
> ...




Sorry I meant why hasn't there been any news on Valeant.


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## skc (28 October 2015)

Tyler Durden said:


> Sorry I meant why hasn't there been any news on Valeant.




Do you mean news in Australia mainstream media? Probably because it's not nearly as interesting as what "name your pop star" has been wearing of late!

There's been plenty of media coverage in the States.

Note that Valeant hasn't collapsed like Enron yet. It's being accused of doing something dodgy and it's struggling to overcome those accusations... but you can give them beneift of the doubt and say there's no actual proof of anything illegal happening yet.


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## basilio (28 October 2015)

No proof of actual wrongdoing/ anything illegal SKC ?

Not quite sure what that means. If you read the material compiled by John Hempster there seems to be a mountain of evidence to show illegal behaviour with regard to running captive pharmacy's and other activities.

At this stage it hasn't been before a court do it hasn't been formally found guilty of wrongdoing. And of course the way the law works nothing still might occur.  However the financial jiggery pokery may well cause investors to bail out quickly.


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## skc (28 October 2015)

basilio said:


> No proof of actual wrongdoing/ anything illegal SKC ?
> 
> Not quite sure what that means. If you read the material compiled by John *Hempster *there seems to be a mountain of evidence to show illegal behaviour with regard to running captive pharmacy's and other activities.




Proof of something illegal can only be achieved through the court of law. There may be lots of evidence... but it has yet to reach the definition of proof.


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