The China Hustle Movie Script

Well, the next day answered the question down 25 percent.

And it ended up trading down as much as 55 percent from where we had put out the report.

Even though it's China and it's a fast-growing economy, pigs do not fly in China, and I think that... There's a proverb in Chinese, "Muddy waters makes it easy to catch fish." (speaking Mandarin) Yeah, so it means water.

In clear water, there is no fish.

Huh.

That saying, "Muddy waters makes it easy to catch fish," explains so much about what goes on in China.

Opacity creates opportunities for people to make money.

That's China's view, muddy waters.

I thought that that was a very apropos name for the firm and chose it.

The "Muddy Waters Report" was the first major claim against a Chinese company, and it began to resonate throughout the industry nowhere more so than at Roth Capital, who'd engineered the deal.

Target price, less than a dollar.

You have pictures of dirty factories.

You have pictures of recycled paper on the ground.

You have people climbing... pictures.

This is a $150-million company.

It's pretty crazy though.

I had sold over $22 million of that deal.

I remember going into Byron's office, asking, "What's going on here?" What was "going on" was that the company had deployed a classic move in the reverse-merger playbook: get a stamp of approval from a trusted source.

Deloitte and Touche had come out with an independent investigation saying that the company was accurately telling about its financial statements.

In the mortgage crisis, banks used rating agencies to disguise crappy mortgage bonds.

Now Orient Paper was using an even more recognizable cover one of the Big Four global audit firms.

Every day, all around the world, Deloitte professionals are making an impact that matters... It turns out that dozens of Chinese reverse mergers used the same trick hiding shady financials behind audits from the Big Four.

It was like handing investors a shiny, thin file - stamped, "Trust me." Because when it comes to living our purpose, it all starts with integrity.

Whether it's Deloitte or PwC, they expect these brands to have significant value wherever they are in the world, but in actuality, the way these partnerships are structured is that each office is its own entity.

So they were able to dollarize renting their name out, effectively.