Is the Eros Whistleblower the Harry Markopolos of Bollywood or Just Another Short Selling Fraudster?

By Tim McCormack and Molly Knobler (published in the Huffington Post)

Eros International, the so-called Netflix of Bollywood, is deep in the throes of either an Enron-type accounting scandal or a vicious smear campaign by an anonymous source intent on driving its stock price down (perhaps to profit from manipulating the share price). The anonymous source, a blogger known as Alpha Exposure, has published a series of reports (see here, here, here and here) alleging that Eros International PLC has misled investors about its cash flow and the number of movies it has released, and engaged in improper insider transactions and various other improprieties.

So the question arises, who is Alpha Exposure? He or she does not claim to be an Eros insider, but instead purports to be merely analyzing publicly available information to identify fraudulent trends in the Eros financial and operational reports.

Is he or she the Harry Markopolos of Bollywood? Mr. Markopolos is, of course, the famous former securities industry executive and independent fraud examiner who uncovered the Bernard Madoff Ponzi scheme. He was not a company insider, but used his extensive industry expertise to analyze Madoff’s claimed financial returns and identify strong indicators of fraud.

Or is Alpha Exposure just a fraudster? Alpha Exposure has more than a few critics among the commenters responding to its Eros reports. They charge that the analysis is sloppy, incomplete and even malicious. They further speculate that Alpha Exposure may actually be a short seller trying to manipulate the stock price through unfounded internet rumors.

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Tagged in: Accounting Fraud, Ponzi Schemes,