Wednesday, April 27, 2016

"Short" & Sweet.....and my favorite SEC filing....

As we get emotionally prepared for Alibaba's annual work of fiction (aka their Annual Report) due out May 5th,  I thought I'd keep this post short and sweet.  Based on current events,  for example, Apple's 26% decline in Greater China revenues, I'm sure that whatever numbers they are able to conjure up, Alibaba's results will be "astounding".  Perhaps they will claim that they are single-handedly putting Apple out of business in China?....who knows?

People are starting to figure this out.....

On April 13th at Grant's, Conference in NYC, Anne Stevenson-Yang, partner and co-founder of JCAP,  and in my humble opinion, the foremost expert on what's really going on in China's economy today, gave a relatively detailed presentation to a room full of money managers, bankers and analysts, describing just how in the world, among other things, that a share of Alibaba is actually worth $36 rather than the $78 it's currently trading at. Author's Note: Although we usually think along the same lines, my price target is slightly lower than Anne's ("Strong Buy" at $7.00/share from my November of 2015 post), but if you know Anne, since she's lived in China for more than 20 years, is an expert in her field and the go-to authority for all that is China, she's occasionally a bit more optimistic than I am on some of these topics, thus the deviation in our valuations.

Anyway, it was a great presentation, so good as a matter of fact that the slides were posted anonymously by the Value Walk Staff. (Link below)   Ironically, her slot on the agenda was right before Jamie Dimon, so she spent a good part of her talk calling Alibaba, JP Morgan's baby, butt-ugly.  I would have found the schedule juxtaposition uncomfortable to say the least, but she apparently pulled it off, as always, without a hitch.  Her main points re Alibaba were:

  • As an ecommerce platform, it’s maxed out
  • A terrible investor of shareholders’ money.
  • Likely using investor capital to generate its own revenues.
  • The Chinese e-commerce story is exceedingly unlikely.
http://www.valuewalk.com/2016/04/alibaba-group-holding-ltd-baba-jcap/

Anne also did a deep-dive into many of the things I've been discussing in this blog since it's inception a year and a half ago.    Misleading GMV, "brushing", reciprocal purchases, dubious assets, constantly growing goodwill, outrageous share-based compensation expense and investments that look like loans to friends. 

Through the magic of Al Gore's Internet, somehow, a few of the folks who attended the presentation found my blog and phone number and have been giving me the occasional call.  Of course, I am always happy to share my thoughts on the future of Alibaba (or just about anything) with my readers. The discussions were informative, insightful and a welcome exchange of ideas.  Anytime really smart people take the time out of their day to call me, I'm flattered.  One particular money manager from L.A. was intrigued by Anne's presentation, as well as my blog..., yet clearly skeptical....as most investors are.  It was as though he had just heard a rumor that the world might not actually be flat and he was grasping for hard evidence to rebut the suggestion.  I call it the "how can this be possible?" reaction.  It's understandable.

After discussing the impossible GMV; staggering Shareholder Compensation; an unbelievable, odd, $20 Billion acquisition spree; the 300 +/- "related" shell companies; and the lack of legal standing US Investors might have when this whole thing hits the crapper, I referred him to my favorite SEC filing of all time, which I've referenced several times over the last year and a half in this blog. This brief two page memo is the most (and perhaps only), accurate, direct, clear, un-equivocating, ethical document submitted to the SEC as a as part of, or since, the Alibaba IPO.  I'm referring, of course, to the Jackie Reses, Yahoo! Chief Development Officer's  amazing 9/16/14 Resignation Letter .  (Text and Link below)  I'm posting it again here since some of my newer readers (e.g. the L.A. Money Manager) may be unaware of its existence.  

Text of Jackie Reses' Resignation Letter from the Alibaba Board of Directors - 9/16/14 - just prior to the IPO:

http://www.sec.gov/Archives/edgar/data/1577552/000000000014048770/filename1.pdf

I, Jacqueline D. Reses, am writing to inform you that I hereby resign as director of the company effective immediately prior to the effectiveness of the Company's registration statement on Form F1 and that I will not be responsible for any part of such registration statement.

Text of the Skadden Arps Cover Letter filed with the SEC along with Jackie's Resignation Letter.

Ladies and Gentlemen: We represent Yahoo Inc. ("Yahoo!"). Yahoo!'s Chief Development Officer, Ms. Jacqueline D. Reses, was previously a member of the board of directors of Alibaba Group Holding Limited ("Alibaba"). Enclosed please find a letter of resignation from Ms. Reses that has been delivered to Alibaba informing it that she has resigned as a member of the board of directors effective immediately prior to the effectiveness of the Alibaba's registration statement on Form F-1 and that Ms. Reses will not be responsible for any part of such registration statement.

This letter is being furnished to the Securities and Exchange Commission pursuant to Section 11(b) of the Securities Act of 1933, as amended, on behalf of Ms. Reses to disclaim any responsibility by Ms. Reses for any part of Alibaba's registration statement filed on Form F-1 (including any amendments thereto). Yahoo! can be reached by writing to Yahoo! Inc., 701 First Avenue, Sunnyvale, California, 94089, Attention. General Counsel or calling (408) 349-7853.

Note that the letter did not say Ms Reses is resigning to "Pursue other interests", "Spend more time with family", Hike the Appalachian Trail or to rededicate her life to Yahoo!, fly fishing or an Ashram somewhere.  She said, and it was repeated twice in the Skadden Arps Cover Letter that she is resigning from the board and will "not be responsible" for any part of the Registration Statement, citing Section 11(b) of the Securities Act of 1933.

For those of you who are not experts in securities law, and I'd include myself in the non-expert group. Section 11(b) refers to defenses available against claimants for Securities Fraud. I've attached a nice Summary of Sec. 11 from the Washington Legal Foundation. What Jackie's letter is really saying, in layman's terms, as interpreted by my Dick Fuld Banker Speak Translator (BST) , is:

"I Jackie Reses am aware of material misstatements, and possible securities fraud in this IPO and I am refusing to be a part of it....so please don't sue me or send me to jail....I'm establishing my 11(b) defense by stepping down as a director and refusing to sign the Registration Statement."  

Note in my prior post that Marissa Meyer, Jackie's boss at the time, and Maynard Webb, presumably had access to the same/similar information that prompted Jackie's resignation, or at least asked some questions about it upon her resignation, as described in my "Breaking News....Marissa Meyer to Resign" post, but Marissa and Maynard, for whatever reason, chose  to stick it out.  Perhaps because of the strict construction of Sec 11, they might not be considered part of the "defined class of defendants"?  At this point, Yahoo! is simply a shareholder and Sec 11 would probably not apply to non-insider (as defined) shareholders. (Again, this will be for the lawyers to hash out).  It's safe to say that Marissa and Maynard are probably aware, at least to some degree, of the Alibaba shenanigans, but are choosing to straddle the fence and collect a paycheck rather than come clean and step down.  On the other hand, as unlikely as it might be, perhaps they are oblivious to the entire mess and aren't very wise to such things?  Perhaps they don't understand Section 11(b) and are just dithering along with Starboard Funds trying to keep their jobs and "maximize shareholder value"?  In any case, I doubt that you'll hear Marissa and Maynard making any joint statements or representations re: Alibaba's awesome financial condition/potential anytime soon.

Just thinking out loud here, but many of the underwriters and banks involved are US Citizens and may indeed be considered part of the "defined class of defendants" for the purposes of Sec. 11.  All of you class action lawyers out there might want to make note of that.

That said, based on her resignation letter alone, Ms. Reses is one of my all-time heroes in American Business.  She did the right thing.  It's just a shame that the other signers of the F1 didn't take the same path.  Except for Tim Steinert and Don Puglisi, the other signers, accountants and lawyers are foreign citizens, safe overseas and presumably immune from US/SEC prosecution.  (Authors Note: Don might want to make sure his China Visa is current and check the flight schedules.  I believe there's a direct from Newark to Beijing that he can get on short notice.)   It's also a shame that Alibaba Investors apparently didn't read, or perhaps don't understand what Jackie's resignation letter is really saying.


Today's Thesis:

Question:  Why would anyone resign from the board of directors of the biggest, most ballyhooed IPO of all time, forfeiting the presumed fortune, glory and wealth that most of us can only dream of, while citing Securities Fraud defenses in her resignation letter, on the very eve of the filing?

Hypothetical Answer:  (To be tested over time)  Because Ms Reses, at the advice of counsel, wanted to make absolutely sure that there was no possibility that she would ever end up in jail.

When I explained my reasoning to my new friend, the L.A. Money Manager, his response was:

"Holy.....(rhymes with duck)"


PS: I would like to personally invite Jackie to comment on my blog, and perhaps set the record straight as to what her thinking was at the time of the above referenced letter.  Maybe it was all a mistake or a bad dream?  If there's a better reason for the resignation letter than "the avoidance of jail time" that I might be unaware of, it would be enlightening and restore my faith in humanity to hear about it.  If any of you journalists following my blog would like to reach out to her, feel free,  it would make a great article, but I'm guessing that you'll get a "no comment" based on the advice of her counsel.


Grant's Interest Rate Observer - Conference Info
http://www.grantspub.com/conferences/index.cfm

Washington Legal Foundation - Securities Act of 1933 Sec. 11 
http://www.wlf.org/upload/0106CLNSpehr.pdf

SEC - Securities Act of 1933 - Current (as Amended)
https://www.sec.gov/about/laws/sa33.pdf

Alibaba Final/Amended F1 - Signers Listed on the last few pages
http://www.sec.gov/Archives/edgar/data/1577552/000119312514341794/d709111df1a.htm



Thursday, April 7, 2016

Alibaba's Cayman Islands Headquarters...

In this post I thought I'd take a few paragraphs to describe Alibaba's  state-of-the-art, Cayman Islands nerve center.  The sprawling campus below provides a nurturing environment for thousands of highly trained, dare I say brilliant, innovative technicians to forge the direction of global e-Commerce for decades to come......

Oooopppsss..... wait a minute.......the picture below is actually Amazon.com's Seattle Campus.  I'm so embarrassed and I offer my apologies, I just can't keep these eCommerce juggernauts straight.  I'm so sorry......my bad.




As I was saying, the picture below is Alibaba's Cayman Islands headquarters.  The facility represents the greatest achievement in collaborative, open, productive, high-tech architecture, boasting nearly three million square feet of design space and test-labs, integrating green-space and creativity...........oh crap.......I screwed this up again....this is actually a concept drawing of Apple's new headquarters in Cupertino, California.......I really have to start paying attention to what I'm doing in these posts.




Ok....I think I've got it now.  Here's Alibaba's Caribbean Shell Company Headquarters pictured below.   Ain't she a beauty!  Four full stories of high tech glory (with parking!).  Note the tropical theme with not only one (1), but two (2) indigenous palm trees out front.  Majestic.  Alibaba's mailing address is: Alibaba Group Holding Limited, Trident Trust Co (Cayman) Ltd, One Capital Place 4th Floor, Georgetown, Cayman.  (Just in case you might want to serve a Summons/Complaint/Subpoena, or anything like that.)



According to the realtor, the entire third floor is empty. This Landmark George Town building is undergoing a full renovation. Money is no object.  Space is available on the third floor from 1,500 sft to 7,000 sft. The property boasts a full back up generator, for those occasional times when the island power cuts out. Power surges can wreak havoc on highly sensitive computer equipment like Alibaba is known to deploy. There's also ample parking. Of course, custom fit-outs are available. Note the two Anchor Tenants are Deloitte and Trident Trust.  Space is priced at US $35.00 per sq. ft.  This space is going to go quickly!  But wait.....there's more!

Alibaba's "Caribbean Headquarters" is also located right across the street from some of the best Indian Food in George Town. Singh's Roti Shop serves some of the finest (and perhaps only) Indo-Caribbean food in the world. As luck would have it, it's actually a Restaurant AND a Pool Bar!  When Alibaba employees are visiting their Shell Company they can stop by for some jerk-tikka-masala and a quick dip in the pool! TripAdvisor  rates Singh's Roti Shop at #28 of the Top 100 Restaurants in George Town. In the time-honored tradition of Caribbean entrepreneurial-ism, you'll notice, they also sell "Telecom Solutions" out of their back room.  Rumor has it that Alibaba uses "Singh's Roti Shop" (SRS) for call center telecom consulting services, but I've not yet been able to verify that claim.  Are there no limits to their skill sets?


If we examine Google earth below we can get the lay of the land and some of the other local amenities adjacent to the Alibaba HQ.  Of note, if you stood on the roof of One Capital Place you could hit a six iron in any direction and have a tough time not hitting a bank/banker or financial person. There are more than 300 Banks, 700 Captive Insurance Companies and 10,000 registered Investment Funds in the Caymans. There are only about 30,000 permanent residents in Georgetown so the ratio is about one financial firm to every three permanent residents.



Of course, everyone knows that the Cayman Islands are a banking mecca.  But have you ever wondered why?  Here's a snippet from the Cayman Islands Activity Guide Website.  Apparently "banking" is a vacation activity now, right up there with scuba diving and sport fishing:

The Cayman Islands have implemented laws to protect and enhance the reputation of the Cayman Islands as a base for offshore financial operations. The Cayman Islands signed a Mutual Legal Assistance Treaty with the United Kingdom and the United States targeting narcotics and other crime related frauds.    However, Cayman Island banking laws specifically exclude tax offenses, which has resulted in a consistent rise in the number and quality of banks seeking a license to maintain a presence in the Cayman Islands. At least 40 of the world's top 50 banks have branches or subsidiaries in the Cayman Islands, indicating the recognition of the islands' stature in international finance as well as its position as one of the leading centers of the global Euro-currency market. Some of the influencing factors include the Cayman Islands strong reputation for sensible regulation, professionalism, confidentiality, tax advantages, asset protection, political stability, good infrastructure and geographical location.

With no taxes on profits, capital gains, income or any withholding taxes charged to foreign investors, the Cayman Islands offer an excellent return on investment; as well as the stability and security of a British Commonwealth State.  There are no estate or death duties payable on Cayman Islands Real Estate or other assets held in the Cayman Islands, making them the ideal place to set up trusts, annuities, and savings. You can easily take advantage of these and the many other benefits of doing business in the Cayman Islands by contacting Cayman National Bank. They are a well established and highly trusted financial services group that provide a full range of services to their domestic and international customers.

Isn't that awesome!  You set up a Corporation/Trust in the Caymans, fund it with US after tax money, start a relationship with one of the "40 of the world's top 50 banks" and you are in business  Since these are global banks, theoretically, you (through your Caymans Corporation/Trust) can invest in virtually any asset, anywhere in the world and every nickel of profit/gain is tax free!  No TAXES EVER AGAIN!  Eureka!

The Panama Papers

As most of you have undoubtedly read, there has been a little bru-ha-ha involving the leak of a few tera-bytes of documents from Mossack Fonseca, a Panamanian Law firm, spilling the beans on all sorts of questionable/improper/illegal/scurrilous activity which we all assumed was going on, but never knew exactly who the culprits were, how deep it went and/or how much money was really involved. The feeding frenzy has implicated a number of world leaders, political figures and celebrities.  The documents have already caused the resignation of Iceland's Prime Minister Sigmundur David Gunnlaugsson only a day after their release.  Keep in mind that the source of these documents comes from just one (1) partial leak from just one (1) Panamanian Law Firm. There will be more.

Most interesting, but not surprising, at least to me, is the wanton participation of China's elite in this Chinese Laundry  (As you might recall I wrote about the "Chinese Laundry" a little over a year ago in my post from 2/7/15).  The Alibaba IPO alone funneled more than US$30 billion, at the time to the Caymans/BVI and other shell companies.  Nearly every Chinese ADR has a similar structure.  The mere existence of these IPO's as well as the wholly predictable disclosure/leak and the repercussions are simply a product of the today's regulatory environment.  The chart below represents the biggest Chinese fish caught in the net thus far.  Bear in mind that Süddeutsche Zeitung (SZ) has released very limited information regarding the amounts of money involved.  (Putin, et. al. $2 Billlion, Gunnlaugsson, $4 million, etc.).  The officials running "The Great Firewall" will be working overtime trying to keep this mess from the masses.  Although, at this time, we have no knowledge of the amounts involved, it wouldn't be irrational to believe that it would be enormous..



As an aside, given that my blog has been blocked in China since the day it was launched, am I the only one who sees the irony in China's political leadership getting "hacked"?

Let's say you're a wealthy Chinese business person and you'd like to get money out of the country.   What would you do?  Well, first, you'd probably contact the best legal and financial minds you could find.  Would you look to Hong Kong? Tokyo? London?  New York?  Of course not.  Everyone knows that the epicenter of global finance is Panama City.  You'd contact a Panamanian law firm 9,000 miles away and ask for their advice.  After your office visit, you'd feel comfortable, armed with the knowledge that the University of Panama City was just "that close" to being  named to the US News & World Report's list of "Top 1,000 Global Law Schools".  Even more impressive, the Chief Information Officer of the firm you chose proudly displays his Magma-Cum-Loudly designation, along with his diploma from Trump University on the wall behind his desk.  Your interview unexpectedly interrupted his game of "Candy Crush", for which he offered a a sincere, heartfelt apology.

Moreover, the cost, for example, of using a firm like Mossack Fonseca is a bargain! According to Ramon Fonseca "Setting up a company might cost between about $700 and $1,000, with a significant part of that fee going to the government. Mossack Fonseca has set up around 250,000 businesses over the past 40 years." Mossack Fonseca is apparently the "Dollar Store" of global Shell Company registration.


Once duly impressed by this "Western Technology Gone Wild", the only logical thing for you to do as a member's of China's Elite, is to go back home to China and tell all of your billionaire/millionaire friends about it!....thus the genesis of the above list.

So Why Weren't US Citizens or any Alibaba Executives Caught in the Net?

The simple (and incorrect) presumption could be that US Investors and Alibaba management are honest and forthright and would never participate in these schemes to pay a Zero % tax rate . Well, that could be accurate, at least for some, but Eoin Higgins pointed out in a recent post that it's more likely that the United States—Panama Trade Promotion Agreement back in 2010, included a taxation clause that effectively shut down any chance of wealthy US Citizens using Panama as any form of secret tax shelter.  The more probable reason for lack of US Citizen disclosure in the Panama Papers is that the United States—Panama Trade Promotion Agreement  chased them all to the Caymans and the BVI where there is no taxation clause.

As for Jack Ma and company, their US Advisers were, I'm sure, well aware of the rules so when they were setting up the BABA Shells it seems obvious now why they chose the Caymans and the BVI. By agreement, and upon request of US Agencies, Panamanian authorities have to turn over chain of ownership related records whereas, in the absence of other crimes, Caymans and BVI authorities do not.  As we will discuss below, it will be interesting to see which rules prevail, what needs to be proven and which information is protected once disclosure requests are served on Caymans authorities re Alibaba.  In other words, the reason Alibaba affiliates weren't caught up in the disclosures is that Jack's advisers had a better grasp of the rules than the rest of China's elite described above.  Jack and his US Investment Bank advisers and lawyers wisely understood that their IPO, bonds and secondary offerings would be subjected to scrutiny by US regulators once questions regarding the veracity of same surfaced.  They simply crossed Panama off their list.

TridentTrust

First, let's examine what  the Alibaba shares, traded on the NYSE really are.  As described above and in the Alibaba IPO, the BABA shares traded on the NYSE are actually shares in the Cayman Islands Shell Corp.  The corp's assets seem to be comprised of a series of ownership interests in other Shell Corps and a series of  contracts and agreements with other related businesses (Contracts which apparently nobody has ever seen and might be quite "fluid") that spells out the relationship between Alibaba Group Holdings Limited (BABA) and the other 300 or so odd businesses included in the Variable Interest Entity (VIE).  The silly little chart, included on page 88 of the IPO filing describes what you are buying when you buy a share of BABA.



If we follow just one (1) of the threads we see that if we buy a share of BABA we are actually buying:

  1. Alibaba Group Holdings LTD (Caymans) aka BABA which owns 100% of:
  2. Taobao Holding Limited (Caymans) which owns 100% of:
  3. Taobao China Holding Limited (Hong Kong) which owns 100% of:
  4.  Taobao Software Co. Ltd (China) and Zhejiang Tmall Technology Company Ltd. (China) which has contractual relationships with:
  5. Zhejiang Taobao Network Company Ltd. (China) and Zhejiang Tmall Network Company Ltd. which are 100% owned by:
  6. Jack Ma and Simon Xie, who also have contractual relationships with item # 4 above (Taobao Software Co. Ltd (China) and Zhejiang Tmall Technology Company Ltd. (China) ) as well as:
  7. An ownership interest in BABA.  Immediately after the IPO Jack Ma owned 7.8% of the outstanding BABA shares.  Simon Xie however was not listed as a BABA shareholder directly in the filing. 
Now, my favorite footnote to the chart refers to (1) Other Subsidiaries, on the far left "dead end" of the flow chart, and I quote:

Includes approximately 70 subsidiaries and consolidated entities incorporated in China and approximately 120 subsidiaries incorporated in other jurisdictions that are not illustrated in this chart. In addition, the entities pictured in this chart hold, directly and indirectly, an aggregate of approximately 40 additional subsidiaries and consolidated entities incorporated in China and approximately 40 additional subsidiaries incorporated outside of China not pictured in the chart.

There, that was simple, wasn't it?  Amazingly, that was just one leg and one footnote of the flow chart.  That should be easy enough to audit from Hong Kong?  Don't you think?  PWC HK seems to have no problem with it.  It's just 300 businesses scattered all over the world.  As I recall, they only charge about $2 million in audit fees and complete the audit with a handful of partners and staff. Again, another bargain. Remember, from my prior posts, foreign PWC franchises are not like they are here in the states.  There's no partner or ownership affiliation with PWC New York or Chicago, etc. They are franchises, licensed to use the name. logo and letterhead.  That's it. The structure is kind of like a 7-Eleven, without the "Big Gulps" and hot dogs.  Each "store" stands on it's own.

Is it just me or is the above the most convoluted corporate structure in the history of finance?  The only possible purpose for all of these devices is to make the whole scheme un-auditable.    There are about a dozen BVI and Caymans Shell Companies disclosed in the IPO filing (I didn't see any Panamanian Shells) and I'd bet more than a few Renminbi that a large number of the "120 subsidiaries incorporated in other jurisdictions" and the "40 additional subsidiaries incorporated outside of China" are also Caribbean Shells.  Simply put, if you've been following my posts and you believe that there are significant issues with Alibaba's numbers, once it hits the fan, your rights as a BABA shareholder are virtually non-existent.  There are no assets.  Nobody to sue or send to jail. There's nothing to liquidate and sell off.  As a member of the wronged class of Investors you're looking at a stack of breached contracts and un-traceable money trails from empty paper/shell companies. Jack & Company simply take their ball & bat (and your money) and enjoy life in China. As an investor, you'll feel like you answered an e-mail from an imprisoned Somali Prince.

Now, let's take a look at Trident Trust, apparently Jack Ma's money launderer of choice and the administrative vehicle which apparently spawned much of this silliness.  The first thing we notice is that the Trident website has both an English and a Chinese version.  That's right, just click a button and everything is translated to Chinese.  Interestingly, there is no Spanish version....no German, French, Dutch, Portugese, etc.  just Chinese.  Oddly, Trident also has an office in Hong Kong.  The Hong Kong office is much closer to Hangzhou and that's where Alibaba's auditors (PWC Hong Kong)  are located, I wonder why Alibaba didn't set up shop in Hong Kong?   Again, Alibaba management is probably in search of the best and brightest.  Why stay close to home when you can travel half way across the world and hire the cream of the crop?

The other thing that Trident offers is, and I don't know how to say this tactfully, but it looks like they are really cheap as well.  They are not "Dollar Store" cheap like Mossack Fonseca, but still cheap. They are yet another discount money launderer.  (Authors Note: If the Trident lawyers are reading this post I'm referring to "money laundering" in only the most positive, upbeat sense.  i.e. It's always good to have nice clean money as opposed to stained, soiled or dirty money.  Trident apparently does a great job of making sure that all of the money in their possession is well laundered and fresh as a daisy.  I believe they also press and fold upon request.) If we examine the pricing schedule  we see that filing for a Foreign corporation starts about $4,700, with annual fees of $2,990. If you are setting up a trust and have US$10 million or more the fees are"negotiable".  In banker-speak that means, "we'll pay you for the privilege of holding your money".  For those of you in the know, and/or have a few million to plunk down in a Shell Company, this is a bargain! On the other hand, even the higher fees of Trident don't seem to be large enough to fund even, for example, a competent IT department.

As an affirmation that there are no problems at any of the Cayman financial institutions, Jude Scott, Cayman Finance CEO immediately came out with a statement that cleared things up, even though, as far as I can tell, nobody asked for his comment. 

 “Cayman is not a secrecy jurisdiction. We have a clear and strong commitment to transparency,” he said. “The Cayman Islands is a global financial hub that efficiently connects law abiding users and providers of capital and financing around the world - benefiting both developed and developing countries.”

Hmmmm....that's not what the website or the brochure says.

Perhaps, to make sure everything is ship shape, Trident will hire Mossack Fonseca (Or as they refer to themselves on their Website "The MF Group") to do an IT Security review?  The MF Group has gained significant, valuable experience through this complex, disturbing ordeal and the experience and advice of these MFers should not be cast to the winds.  There are real lessons to be learned from this exercise.  

Even today, and I'm not kidding, on the front page of the MF Group website they offer:  

Exclusive Online Services
A secure online account that enables you to
access your corporate information anywhere...

Of course these secure, on-line services are described in both English and Chinese.  Apparently the statement "enables you to access" now refers to the generic "you", meaning just about anyone on the planet.  You just can't make this MF-ing stuff up.

Aftermath

So it's clear that the MF Group has been MF-ing-up all over the place.  They are claiming to be a victim, with the "real story" being the horrific breach of the sanctity of their very personal, client information.  I'm sure the firm has its' "search for the real killers" well underway.

Which spawns today's Thesis:

Based on everything we know today, is it more probable that:

1.) The MF-ers are just a screwed-up, silly little rogue, "Dollar Store" law firm which somehow, probably because someone forgot to sign out of an administrator session, got "hacked" causing all of their (allegedly) ill-informed, crooked clients personal info to be spewed all over the Internet?  The MF-ers happen to be the sole source of anonymous Shell Corporations and Trusts for the rich and famous (infamous) and everything else going on in the Caymans, BVI, Panama, Bermuda, etc. is all completely legitimate, innocent and above board?  It's just happenstance that "40 of the world's 50 top banks" have set up shop on these little unregulated tropical vacation spots?  It's just a strange coincidence that a cottage industry of off-shore Trust and Shell Corp services, complete with their bilingual (Chinese/English) websites has flourished in an environment specifically legislated to foster secrecy and keep the tax man at bay?

OR:

2.) NOT

This whole episode would be much more comical if it hadn't put our entire financial system at risk.


Other Reference Links:

One Capital Place - Space Available

Singh's Roti House
https://www.tripadvisor.com/Restaurant_Review-g147366-d1046401-Reviews-Singh_s_Roti_Shop_Bar-George_Town_Grand_Cayman_Cayman_Islands.html

Cayman Islands Activity Guide

Shell corps
http://www.bloomberg.com/news/articles/2016-04-04/world-leaders-hid-wealth-via-shell-companies-report-alleges

Panama Papers
http://www.bloomberg.com/news/articles/2016-04-03/german-paper-claim-huge-trove-of-data-on-offshore-accounts

Xi jin Ping Family Members disclosed in the Panama Papers
http://finance.yahoo.com/news/panama-papers-family-chinas-president-xi-implicated-075633225.html;_ylt=AwrC1CpAaAJXQlAAYzmTmYlQ;_ylu=X3oDMTEyNHZhZWZrBGNvbG8DYmYxBHBvcwMyBHZ0aWQDVklEMDNfMQRzZWMDc2M-

China's Elite
https://www.icij.org/offshore/leaked-records-reveal-offshore-holdings-chinas-elite#

Paul Gillis - Trident Trust
http://publicradioeast.org/post/when-investors-buy-alibaba-shares-they-wont-get-what-they-paid#stream/0

Alibaba Mailing Address:
Alibaba Group Holding Limited
Trident Trust Co (Cayman) Ltd
One Capital Place 4th Floor
Georgetown, Cayman

Alibaba Mailing Address per the US Patent Office
https://www.onscope.com/ipowner/en/owner/492/addresses.html

Mossack Fonseca - "

"ABOUT THE MF GROUP"

http://www.mossfon.com/

Mossack Fonseca a "victim"
http://www.usatoday.com/story/news/2016/04/06/panama-papers-law-firm-says-hacking-
victim/82695208/

Ramon Fonseca Interview

Jude Scott - Cayman Finance CEO - even though nobody is accusing us....I want to make sure that everyone knows that we are not doing anything illegal.....getting out front of this one....
http://finance.yahoo.com/news/cayman-finance-ceo-cayman-not-022400724.html;_ylt=A0LEVzfgewVXZ44AQOlXNyoA;_ylu=X3oDMTEyNmJjZWttBGNvbG8DYmYxBHBvcwMxBHZ0aWQDQjE3OTJfMQRzZWMDc2M-

Trident Trust
http://www.tridenttrust.com/jurisdiction_tpan_companies.html

Panama Papers
http://time.com/4280864/panama-papers-capitalism/


New Yorker - Why US Citizens weren't snagged in the Panama Papers
http://www.newyorker.com/news/john-cassidy/panama-papers-why-arent-there-more-american-names


Eoin Higgins - Panama Papers Analysis - 2010 Treaty
http://eoinhiggins.com/no-us-names-in-panama-papers-leak-why-not/

Washington Poast - How easy is it to get an "anonymous" shell corp?
https://www.washingtonpost.com/news/monkey-cage/wp/2016/04/07/for-research-we-pretended-to-be-crooks-and-terrorists-and-tried-to-buy-shell-companies-the-results-were-disturbing/

US - Panama Trade Promotion Agreement
https://ustr.gov/trade-agreements/free-trade-agreements/panama-tpa

Putin, et al
http://panamapapers.sueddeutsche.de/articles/56fec05fa1bb8d3c3495adf8/

NYT - Panama Papers
http://www.nytimes.com/2016/04/06/world/europe/panama-papers-iceland.html?_r=0