DealBook: An Unusual Signature Draws Attention to Nu Skin

Photo Richard M. Nixon, whose name still carries weight.Credit Associated Press

Former United States presidents don't typically become bankers after their time in office. Nor, for that matter, do they come back from the dead.

But Richard M. Nixon, the nation's 37th president, appeared to have done both, at least according to a recent regulatory filing from Nu Skin, a multilevel marketing company that is based in Utah. In the filing is a document signed by a Richard M. Nixon.

The odd (and unsettling) signature caught the attention of John Hempton, a short seller and the chief investment officer of the hedge fund manager Bronte Capital, who wrote a blog post on Tuesday about the matter.

It turns out, however, that Mr. Nixon did not in fact sign the document. Rather, a JPMorgan Chase employee named Richard M. Hixson did.

The original confusion arose from a document attached to Nu Skin's latest quarterly filing with the Securities and Exchange Commission. The amendment, filed last month, contains the Richard M. Nixon signature on behalf of JPMorgan, as Mr. Hempton pointed out in his blog post.

According to his blog post, Mr. Hempton went to great lengths to try to get an answer. He searched the S.E.C.'s database and LinkedIn for people named "Richard M. Nixon" who worked at JPMorgan. The searches came up empty. He even searched an internal phone directory.

The answer turned out to be much simpler.

The actual JPMorgan Chase document outlining the loan facility in question is signed by Mr. Hixson, according to a person briefed on the original documents. Somewhere along the way, Nu Skin misspelled the name in its filing.

In a statement filed on Tuesday afternoon, Nu Skin said:

"The amendment was signed by Richard M. Hixson, senior underwriter, JPMorgan Chase Bank, N.A., not Richard M. Nixon."

Nu Skin's most recent document signed Mr. Nixon is also signed by Ritch N. Wood, the company's chief financial officer.

Besides calling attention to the rather unusual signature — and raising questions about the regulatory filing itself — Mr. Hempton also provides information on the company's breach of loan covenants.

The explanation is somewhat complicated, but Mr. Hempton summarizes his findings as follows: "They breached their covenants and received what looks to be an (ex) Presidential Pardon."

In the end, no presidential pardon was necessary.

All of which goes to show, it's important to pay attention to details.

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High Health Plan Deductibles Weigh Down More Employees

Anita Maina, a health services associate, skipped a visit to the doctor after ripping off a fingernail while working on a project because she had not met her health plan's $6,000 annual deductible. By TARA SIEGEL BERNARD September 1, 2014

Anita Maina was working on an arts and crafts project she found on Pinterest — creating a table out of wood and cork — when she ripped off a fingernail while removing staples from a piece of wood.

"It is one of those things that really hurt, and I thought I should go to urgent care," said Ms. Maina, 27.

But she ultimately skipped the visit since she had not met the $6,000 deductible on her health plan, and she knew she probably did not have much left in her health savings account, a type of tax-advantaged savings vehicle that is often used with high-deductible plans to help defray out-of-pocket costs.

Ms. Maina, an associate in a health and human services consulting agency, said her employer added the high-deductible plan earlier this year; though her monthly premiums are only $34, these plans require employees to pay for a greater share of their medical expenses upfront, before the plan starts making payments.

Insurers and independent providers, including Healthcare Bluebook, offer online tools that help consumers estimate their costs and the quality of the providers.

Next year, even more corporate workers are likely to be offered high-deductible plans — sometimes known more benignly as consumer-directed plans — and at a rising share of large companies, it will be the only option remaining.

"You can't sugarcoat this," said Paul B. Ginsburg, a professor of the practice of health policy and management at the University of Southern California's Sol Price School of Public Policy. "This is a more challenging situation for consumers and it's a reflection of how difficult it is to afford health care."

Just as employers replaced pensions with retirement savings plans, more large companies appear to be in a similar cost-sharing shift with health plans. Besides making workers responsible for more of their care, employers hope these plans will motivate employees to comparison-shop for medical services — an admirable goal but one that some say is hard to achieve.

Several big companies started offering consumer-driven plans as their only option in the last couple of years, including JPMorgan, Wells Fargo, General Electric and Honeywell, among others; it is the only choice for Bank of America employees earning more than $100,000.

Next year, nearly a third of large employers will offer only high-deductible plans — up from 22 percent in 2014 and 10 percent in 2010, according to a study by the National Business Group on Health, which included 136 large companies that collectively employ 7.5 million workers. And 81 percent of those large employers will have added one of these plans to their lineup of choices, up from 53 percent in 2010.

With high-deductible health plans, consumers pay for all their medical services — at the insurer's negotiated rate — until they meet their deductible. After that, consumers typically pay coinsurance, which is a percentage of each service — say 10 to 35 percent — until they reach the out-of-pocket maximum.

That is scheduled to be generally capped at $6,450 for singles and $12,900 for families in 2015, according to the Kaiser Family Foundation, and includes items like deductibles, coinsurance and co-payments, but not premiums, which tend to be lower in these plans.

So it is easy to see how shopping for an M.R.I. of the lower back — which can range from roughly $415 to $4,530 — would suddenly pay off for both the employee and the employer.

"There are different approaches to cost containment," said Professor Ginsburg. "One is having a lot of skin in the game, or just having to pay for a lot of your health care."

Insurers and independent providers, including Castlight and Healthcare Bluebook, offer tools that help consumers estimate their costs and the quality of the providers. But shopping around can still be challenging.

"Castlight and others like it make a valiant effort to provide price and quality information," said Uwe E. Reinhardt, a health policy expert and professor at Princeton.

"But the question is whether the prices they give you are binding. To really shop around effectively, prospective patients need binding prices."

Castlight — working with more than 130 large employers — provides consumers with tools that offer personalized pricing and quality information for services within their insurer's network. But even the most diligent shoppers can run into problems.

"They may have done everything right," said Dr. Dena Bravata, Castlight's chief medical officer. "They may have picked an in-network gastroenterologist for a colonoscopy. But then you don't know if you need to have a biopsy, which then goes to a lab or pathologist who is out of network."

And using the tools can simply be impractical in certain circumstances. "Most health care costs are incurred by very sick patients, such as those with heart attacks, strokes, cancer, mental illness, injuries — often under emergency conditions," said Sara Collins, vice president for health care coverage and access at the Commonwealth Fund.

Another concern is that some people will be ill prepared to handle large bills, and will forgo care as a result. "If you go to the pharmacy and there is a $1,000 deductible on your drug benefit, they aren't going to write you a five-year loan," said Karen Pollitz, a senior fellow at Kaiser.

High-deductible plans are often used with health savings accounts. As long as the plan deductibles in 2015 exceed $1,300 for single people or $2,600 for families, and meet other criteria, employers and workers can deposit money into the H.S.A.; in 2015, individuals will be allowed to contribute up to $3,350 in pretax dollars (or $6,650 for family coverage). The money grows tax-free and can be used to pay for out-of-pocket health care expenses. (Health reimbursement accounts can also be used, but those are largely controlled by employers, and workers cannot keep the money if they leave.)

The National Business Group on Health's study found that the vast majority of large employers make deposits. But Kaiser's 2013 survey, which covers both small and large employers, found that about half of employers do not fund these accounts. Of those that do, Kaiser found they deposit $950 for singles with health savings accounts, on average, and $1,680 for families.

Kaiser also found that the average deductible for single people in a high-deductible plan paired with a health savings account was $2,098 in 2013, while it was about $4,037, in aggregate, for families.

Employers can insulate their workers by depositing more generous amounts into their H.S.A.s, which employees keep even if they leave the company. "Once it becomes their money, they treat it like their money, and there is that desire to shop," said Brian Marcotte, president of the National Business Group on Health. "And that is what employers are trying to do."

That was one of the attributes that was most attractive to Matt Van Horn, a 46-year-old senior software engineer who lives in Lafayette, Calif., with his wife and 13-year-old son. His employer, an online apparel company, contributes $1,500 into an H.S.A., or half of his family's $3,000 deductible. "I like having the H.S.A., and the fact that it will survive the insurance policy," he said, adding that the policy feels more like catastrophic coverage, although preventive care is fully covered (as it is with all high-deductible plans).

Given the increased adoption of the plans — Kaiser estimates about 20 percent of workers covered by plans were enrolled in a high-deductible plan with a savings account option in 2013, up from 8 percent in 2009 — consumers will need to weigh their options more closely during open-enrollment season.

"Understanding the mechanics of these plans is really important," Mr. Marcotte said. "When you walk into the pharmacy and all of a sudden it costs $200 as opposed to $20, there is sticker shock."

When evaluating these plans, consumers need to ask themselves several questions: Do you have the money to pay for all medical expenses until the deductible is met? What is the out-of-pocket maximum — can you afford that? And are you the type of person who will skip needed care if you need to pay out of pocket?

Many workers may not have a choice — a high-deductible plan may be their only option. "If the deductible is very high, all of a sudden the financial protection part of insurance, you are losing that," Professor Ginsburg said. "You still have protection against very high claims, but you have people who may have to pay $5,000 during one year toward the cost of their care or more. And a lot of people don't have that kind of savings."

Correction: September 2, 2014

An earlier version of a picture caption with this article misstated the given name of an associate in a health and human services consulting agency who has a high-deductible health care plan. She is Anita Maina, not Alina.

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Bits Blog: Uber Service Banned Across Germany by Frankfurt Court

Photo The court ruling in Germany is the latest setback that Uber has faced as it expands globally.Credit Britta Pedersen/DPA, via Agence France-Presse — Getty Images

LONDON – The ride-hailing service Uber is about to have a head-on collision with Germany's taxis and legal system.

A court in Frankfurt has banned Uber's most popular service from operating in the country until a hearing later this year on the legality of the product, which allows people to use their smartphones to book rides with freelance drivers.

The potential countrywide ban in Germany is the latest in a number of legal setbacks that the San Francisco-based company has faced in Europe and North America as it tries to expand its car service globally.

Uber said it would continue operating in Germany and would appeal the decision.

But Uber faces fines in Germany of up to 250,000 euros, or about $330,000, or its local employees could be jailed for up to six months if the company violates the temporary injunction, which was made last week but came to public light only on Tuesday.

The ruling is one of the most severe legal restrictions that the company has faced in any country since it was founded five years ago. A Brussels-based court in April imposed a €10,000 fine on Uber's drivers for every ride that they accept in the city.

As part of its ruling, the German court said that some of Uber's drivers did not have the required permits or insurance to operate as taxi drivers. The ban relates to the company's low-cost "UberPop" product that connects drivers with potential customers. Uber's premium product — the so-called Uber Black, which uses luxury sedans and chauffeurs — is not affected by the court's decision.

Until a final ruling, Uber, a start-up that has been valued at $17 billion and operates in more than 100 cities in 45 countries, may be liable for the German fines each time it violates the ban.

To emphasize that point, the Frankfurt-based court said it would be Uber and its employees — not the drivers — who would face the legal penalties of violating the injunction.

Uber in a statement noted that Germany was one of its fastest-growing markets in Europe and said, "You cannot put the brakes on progress."

"We believe innovation and competition is good for everyone — riders and drivers, everyone wins," the company said.

A number of other American technology giants, like Amazon and Google, have also faced legal difficulties in Germany related to the country's labor standards and strict privacy rules.

Some policymakers, including Neelie Kroes, the departing European commissioner in charge of the Continent's digital agenda, criticized the court's decision, saying that it could hamper innovation and reduce competition.

Other analysts, however, said they believed that the court was simply addressing a specific legal challenge linked to how Uber must ensure that all of its drivers meet the country's taxi regulations.

Masan Turun, a 40-year-old taxi driver in Berlin, said he found the ruling fair, given that Uber drivers do not have to meet the standards required of taxi drivers. "They don't have to learn any street names, hotels or hospitals," Mr. Turun said.

Another Berlin taxi driver, Brigitte Holzwarth, 60, said the ruling against Uber was a good start. "So far they haven't harmed us much, but if they expand, it could become problematic for the taxi industry," she said. "It is expanding, especially among young people."

The latest challenge was brought by Taxi Deutschland, a German trade body that has regularly criticized Uber for not complying with the regulations.

Dieter Schlenker, the chairman of Taxi Deutschland, referred to Uber's business model as a "locust," and took aim at the company's investors, which include Google's venture capital unit.

"Uber operates with billions of cash from Goldman Sachs and Google, wraps itself up to look like a start-up and sells itself as the saviour of the new economy," Mr. Schlenker said.

Other German taxi groups, which have fought Uber's rise in cities like Berlin and Hamburg, supported the recent ruling, adding that the start-up should operate by the same rules that apply to other German taxi companies.

"We welcome fair competition and a level playing field for all market participants," Hermann Waldner, chief executive of the rival European taxi app taxi.eu, said in a statement. "The taxi industry is now more in demand than ever before, and this judgment is a step in the right direction."

Last month, Uber won a reprieve in Berlin when a court there suspended a ban by the city's authorities, which had previously ruled that Uber did not comply with passenger safety standards.

This summer, more than 10,000 taxi drivers in cities including Madrid and London took to the streets to complain about Uber, which they said did not comply with local rules regulating the industry.

Taxi drivers and customers in several United States cities have also criticized the company's tactics. Uber has been accused of trying to poach drivers from rival services like Lyft, and some of Uber's drivers have been arrested for illegal activities.

Uber says it is increasing competition in taxi markets, particularly in Europe, that have a history of limited competition and high prices.

Katarina Johannsen contributed reporting from Berlin.

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DealBook: New York Set to Accuse Evans Bank of Redlining

Photo Evans Bank's business in the Buffalo area dates to 1920.Credit Dan Cappellazzo for The New York Times

Drawn in thick marker along the map of upstate New York, the line snaked down the Niagara River and zigzagged east to outline a swath of Buffalo and its surrounding neighborhoods.

But one area of the city — neighborhoods in east Buffalo, where more than 75 percent of the city's African-American population lives — was explicitly excluded, cut off from access to mortgage credit.

That map, ringed by a line, is at the center of a sweeping investigation by the New York attorney general, Eric T. Schneiderman, into whether banks are "redlining" — deliberately choking off mortgage lending to predominantly minority communities — people briefed on the matter said.

The investigation was expected to reach its first target as early as Tuesday, the people said, with Mr. Schneiderman's office taking aim at Evans Bank, a regional lender whose business in the Buffalo area dates to 1920, accusing it of denying mortgages to African-Americans regardless of their credit.

The case, expected to accuse Evans Bank of violating the Fair Housing Act — a federal law intended to ensure equal access to credit — is a harbinger of other lawsuits that could be brought against some of the nation's largest banks, several people briefed on the investigations said.

In the suit, expected to be filed in state court, prosecutors were to outline how, since 2009, Evans Bancorp has created a map that defined the "trade area," places in the Buffalo metropolitan region where the bank would make mortgages and other loans. The bank, prosecutors contend, deliberately excised much of Buffalo's East Side.

Rival banks, the authorities said, lent to neighborhoods on the East Side at a far higher rate than Evans Bank, suggesting that the lending patterns did not stem from a dearth of willing minority borrowers.

"We believe that the allegations being made by the New York State attorney general are unfounded and without substance, and we will vigorously defend this complaint through the legal system," David J. Nasca, president and chief executive of Evans Bank, said in a statement, adding that he was "disappointed" to learn about the pending action.

Mr. Nasca said the bank was "confident that our residential lending practices meet all applicable laws and regulations."

Also in a statement, Mr. Schneiderman said, "It is crucial that all New Yorkers, regardless of the color of their skin or the racial composition of their neighborhood, be afforded an equal opportunity to obtain credit."

The suit offers a detailed look at the uneasy state of lending in the United States. In the heady days before the 2008 financial crisis, as Wall Street's mortgage machine hummed, the nation's largest banks made loans in black and Hispanic neighborhoods, although often at steep rates. Since then, though, the authorities nationwide have grown concerned that the pendulum has swung too far in the opposite direction, creating a patchy credit drought as banks refuse to lend in those same minority communities where credit once flowed.

That unequal access to credit, the authorities say, threatens to exacerbate the country's yawning wealth gap. Part of the problem is that the foreclosure crisis disproportionately affected black and Hispanic communities, wiping out billions of dollars of housing wealth, federal mortgage data shows.

Mortgage lending is critical, the authorities say, to bolster homeownership — a cornerstone of upward mobility — in minority communities still trying to dig out from the recession. Denied access to credit, state and federal authorities warn, minority communities are helpless to address problems like boarded-up homes, foreclosures and blight that have long ravaged neighborhoods.

Pointing to the damage wrought, in part, by such problems, the City of Providence, R.I., sued Santander Bank in May, accusing it of systematically refusing to lend in predominantly minority neighborhoods. From 2009 to 2012, the lawsuit said, new mortgages in Providence's white neighborhoods proliferated while those in minority neighborhoods plummeted by 63 percent a year from the number of new mortgages made in 2006 and 2007.

"It's a civil rights issue," said John P. Relman, the lead lawyer in the suit against Santander.

"We categorically reject this accusation and we will vigorously defend ourselves against the legal action," said a spokesman for Santander, which is fighting the suit. "However, we are willing to work with the City of Providence to allay their concerns."

Providence is not alone. The city's lawsuit is one of many cases that have been filed against banks in the aftermath of the financial crisis. The Los Angeles city attorney, Mike Feuer, sued JPMorgan Chase in May, accusing it of both reverse redlining — the practice of steering minority borrowers toward expensive, predatory loans — and traditional redlining.

In a kind of perverse symbiosis, the lawsuit against JPMorgan argues, one practice depends on the other. Reverse redlining comes first, making it difficult for minority communities to obtain loans, except at high rates. Once those loans sour, though, minority communities are left in a credit drought, the suit says.

"These foreclosures often occur when a minority borrower who previously received a predatory loan sought to refinance the loan, only to discover that JPMorgan refused to extend credit at all," the suit says. The action against JPMorgan came on the heels of similar cases against Wells Fargo and Bank of America.

The original lawsuit against JPMorgan was dismissed, but the city is refiling.

The term "redlining" traces back to the 1930s, when the Federal Housing Administration used red ink to designate areas that the housing agency considered far too risky to receive loans. Since then, the term has come to describe how banks would draw a red line around areas they refused to lend in.

Such a line figures prominently in the lawsuit expected against Evans Bank, according to a copy of the suit reviewed by The New York Times.

Outlining the geographic region where it focused its business, Evans Bank drew a line "bisecting the city," according the suit. Outside the line — a boundary that prosecutors said excluded "all of the majority African-American neighborhoods" in Buffalo — the bank did not solicit customers or extend mortgage loans.

The city was already racially segregated, but prosecutors contend that Evans Bank's lending practices only aggravated the divide. Buffalo, a city that, like many along the East Coast, has been battling a prolonged economic downturn, ranked as one the most highly segregated large metropolitan areas in the nation, according to 2010 census data.

The redlining "has had damaging effects over time," prosecutors say in the lawsuit, "contributing to increased vacancies due to unavailability of new purchase loans and increased deterioration of housing stock."

Virtually all of the bank's efforts to attract customers were focused within its so-called trade area, prosecutors say. The "vast majority" of Evans's print marketing efforts appeared in local newspapers that were not circulated on the East Side of Buffalo, the suit says. Evans Bank also clustered its branches in predominantly white neighborhoods, according to prosecutors. Of its 14 branches throughout New York State, 11 were in Buffalo's suburbs, which largely consist of white borrowers.

The lending policy at Evans, prosecutors say, walled off people living outside the trade area from qualifying for certain products at all, regardless of their creditworthiness. For example, one loan product, Evans Community Solutions, was available only to borrowers living within the bank's trade area.

Poring over reams of information from the Home Mortgage Disclosure Act, a federal law requiring banks to report data on their loans so that regulators can identify patterns of racial discrimination, prosecutors discovered a lending gulf. From 2009 to 2012, the data shows, Evans received 1,114 applications for residential mortgages, but only four — or less than 1 percent — came from applicants who identified as African-American.

Because some areas in Buffalo were hit harder by the foreclosure crisis, it makes sense that all lenders, including Evans Bank and its rivals, received fewer applications from minority borrowers.

Still, prosecutors say, Evans Bank's lending in African-American communities lagged behind its rivals. Compared with other banks that maintained a branch in Buffalo, prosecutors found that Evans "drew mortgage applications from African-American borrowers and East Side borrowers at by far the lowest rate," the lawsuit says.

Even banks without an office in Buffalo, prosecutors say, managed to make more loans to African-American borrowers in the area at more than "double the rates that Evans did."

A version of this article appears in print on 09/02/2014, on page B1 of the NewYork edition with the headline: New York Set to Accuse Buffalo Bank of Redlining.

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Bits Blog: Uber Banned Across Germany by Frankfurt Court

LONDON – The ride-hailing service Uber is about to have a head-on collision with Germany's taxis and legal system.

A court in Frankfurt has issued an order barring Uber from operating in the country until a hearing later this year on the legality of the service, in which people use smartphones to book rides from freelance drivers.

Uber, an American company, faces fines of up to 250,000 euros, or $330,000, and its German employees face up to six months in jail if the company violates the temporary injunction, which was made last week but came to public light only on Tuesday.

The court ruled that Uber's drivers did not have the required permits or insurance to operate as taxi drivers.

Uber, though, said it would continue operating in Germany and would appeal the decision.

Until a final decision, Uber, a start-up that has been valued at $17 billion and operates in more than 100 cities in 36 countries, may be liable for the fines each time it violates the ban. Uber's local employees who coordinate its local activities could face jail time – but not drivers — under the court order, because the company is mainly responsible for facilitating the bookings.

Uber said in a statement: "We believe innovation and competition is good for everyone, riders, and drivers, everyone wins. You cannot put the brakes on progress."

German taxi associations, which have fought Uber's rise in cities like Berlin and Hamburg, welcomed the ruling, adding that the start-up should operate by the same rules that apply to other German taxi companies.

"We welcome fair competition and a level playing field for all market participants," Hermann Waldner, chief executive of the rival European taxi app taxi.eu, said in a statement. "The taxi industry is now more in demand than ever before, and this judgment is a step in the right direction."

Last month, Uber won a reprieve when a Berlin court suspended a ban by the city's authorities, who had previously ruled that Uber did not comply with passenger safety standards.

Earlier this summer, more than 10,000 taxi drivers from Madrid to London also took to the streets to complain about Uber, which they said did not comply with local rules that regulate the industry.

Taxi drivers and customers in several United States cities have also criticized the company's tactics. Uber has been accused of trying to poach drivers from rival services like Lyft, and some of Uber's drivers have been arrested for illegal activities.

The company says it is increasing competition in taxi markets, particularly in Europe, that have suffered from limited competition and high prices.

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DealBook: Chinese Company’s Shares Suspended on Critical Report

HONG KONG — Trading in shares of Tianhe Chemicals, which raised about $650 million in a Hong Kong listing in June, was suspended on Tuesday morning after a report on a website affiliated with short-sellers described the company as "one of the largest stock market frauds ever conceived."

Shares in Tianhe fell nearly 5 percent on Tuesday after publication of the report by Anonymous Analytics, a faction of the hacking group Anonymous, which said Tianhe had grossly overstated its revenue and profit in recent years, in some cases by as much as 85 percent.

Anonymous Analytics says it seeks to expose fraud and corruption at public companies and has taken aim at Chinese businesses before. It said in a disclosure that it held no position in Tianhe's shares but that readers should assume its affiliates had sold short Tianhe's stock or debt "and therefore stand to gain substantially in the event that the price of the stock decreases."

Jonathan Yeung, an investor relations representative at Tianhe, said Tuesday by telephone, "We are reviewing the situation and will make an announcement to the stock exchange in due course." He declined to comment further.

Under Hong Kong's listing rules, the company, which makes lubricant additives, will be required to publish a stock exchange announcement explaining why its shares were suspended. Its initial announcement carried standardized language saying that it had requested the trading suspension "pending the release of an announcement regarding inside information of the company."

Before listing in Hong Kong in June, Tianhe became enmeshed in a bribery investigation into the hiring practices of Wall Street banks, after JPMorgan Chase removed itself from a potentially lucrative underwriting role in the company's share sale.

The bank, one of several being investigated by the United States Securities and Exchange Commission, which is trying to learn whether the practice of hiring the children of China's political and business elite, was directly linked to winning deals, had employed the daughter of Tianhe's chairman.

The woman, Wei Jiao, also known as Joyce Wei, subsequently moved last October to UBS, which was also acting as an underwriter on Tianhe's I.P.O. UBS suspended two bankers in February during an internal investigation into the hiring of Ms. Wei and its role in the deal. One of those bankers has since left the company, which retained its underwriting role.

Tianhe had planned to raise as much as $1 billion, but conducted its I.P.O. in June at 5.07 billion Hong Kong dollars, or $654 million, pricing its shares at 1.80 Hong Kong dollars each. The stock has since risen sharply and despite the decline on Tuesday was trading at 2.31 dollars, or 28 percent above the I.P.O. price. Its market value stood at about 59 billion dollars.

In recent years, it has not been uncommon for short-sellers and their affiliates to publish highly critical reports alleging fraud or dubious accounting at Chinese companies. Shares in the targeted companies often fall in immediate response to such reports, meaning a short position — or a bet that the stock price will fall—can yield significant profits, even before the company has a chance to respond to the allegations, which may or may not turn out to have substance.

While other outfits, including Muddy Waters Research, Glaucus Research Group and the website Alfredlittle.com, have exposed several accounting issues at Chinese companies that in some cases have led to steep declines in stock prices, delistings and regulatory investigations, China has been making it more difficult to conduct that kind of on-the-ground research. The Chinese authorities have been curtailing access to domestic corporate filings and have even jailed analysts conducting research in the country.

In its report on Tuesday, the contents of which could not be immediately independently verified, Anonymous Analytics said that original filings made by Tianhe's main Chinese operating subsidiaries to the State Administration for Industry and Commerce, or S.A.I.C., showed revenue and profit that were 85 percent to nearly 100 percent less than what the company declared in its filings to investors in its Hong Kong I.P.O.

"The S.A.I.C. filings show that at best, Tianhe is a relatively small company which generates only a fraction of the business it claims," the Anonymous Analytics report said. "Given these discrepancies, Tianhe's I.P.O. prospectus appears to contain some of the most fabricated financial statements we have ever encountered."

The report also claimed that Tianhe's Chinese units kept two sets of books, both of which were filed to the S.A.I.C. but only one of which was shown to the company's Hong Kong auditor, Deloitte Touche Tohmatsu.

"The original set was audited by a registered local auditing firm and shows that Tianhe is a fraud," the report alleged. "A second set was audited by Deloitte and matches with Tianhe's I.P.O. prospectus."

A spokesman for Deloitte had no immediate comment.

Tianhe's I.P.O. had four lead underwriters. Representatives of UBS, Goldman Sachs, Morgan Stanley and Bank of America's Merrill Lynch unit all declined to comment Tuesday.

Anonymous Analytics first rose to prominence among short-sellers of Chinese stocks in September 2011, when it published a report on its website alleging that Chaoda Modern Agriculture, a Chinese vegetable grower listed in Hong Kong, had been deceiving investors and perpetrating corporate fraud for a decade. Chaoda's shares were immediately suspended from trading in Hong Kong and the company later fiercely rejected the report's claims.

But Chaoda has struggled in the three years since — the stock remains suspended from trading and a recent filing of its unaudited results for the past three years shows the company losing money after a sharp decline in revenue. Chaoda blamed the Anonymous Analytics research report, saying the report had tarnished its reputation and led its business partners to lose confidence in it.

Other reports have not had the same effect. Since Anonymous Analytics published a critical report against it in July 2012, shares of Qihoo 360, a Chinese Internet company listed in New York, have risen about 400 percent.

In May of this year, Anonymous Analytics made its first "buy" recommendation on a stock, Demand Media, a digital media company listed in New York. The shares have since risen only slightly.

In response to emailed questions seeking more information about the group and whether it made money from the report, such as by preselling its research findings to short-sellers or others, Anonymous Analytics wrote in an email: "We don't really talk about AA's structure and how we operate. However, regarding your question, none of us (AA) have any sort of financial interest in Tianhe. In fact, we haven't made a penny from our work on this report. We did this report because its what we do and its the right thing to do."

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DealBook Column: Public Pension Funds Stay Mum on Corporate Expats

Photo Anne Simpson is the senior portfolio manager and director of global governance at Calpers.Credit Max Whittaker for The New York Times

In the outcry about the recent merger mania to take advantage of the tax avoidance transactions known as inversions, certain key players have been notably silent: public pension funds.

Many of the nation's largest public pension funds — managing trillions of dollars on behalf of police and fire departments, teachers and others — have major stakes in American companies that are seeking to renounce their corporate citizenship in order to lower their tax bill.

While politicians have criticized these types of deals — President Obama has called them "wrong" and he is examining ways to end the practice — public pension funds don't appear to be using their influence as major shareholders to encourage corporations to stay put.

In the past six months, some of the nation's largest companies have announced plans to move abroad. AbbVie, a pharmaceuticals company based in Illinois, has agreed to acquire a smaller British rival, Shire, so the combined company can relocate to Britain for tax purposes. Another drug company, Mylan, which is based outside Pittsburgh, has proposed buying the international generic drug business of Abbott Laboratories so the company can relocate to the Netherlands. Medtronic, a medical device company based in Minneapolis, has agreed to acquire Covidien of Ireland. Applied Materials has agreed to buy Tokyo Electron so it, too, can move to the Netherlands. And last week, Burger King announced it was buying Tim Hortons, the Canadian chain of coffee-and-doughnut shops, in a deal that would make Burger King a corporate citizen of Canada.

The California Public Employees' Retirement System, the nation's largest public pension fund and typically one of the most vocal, has remained silent.

"We don't have a view on this from an investor standpoint — we're globally invested, as you know, and appreciate that tax reform is a government role," Anne Simpson, Calpers's senior portfolio manager and director of global governance, told me. "We do expect companies to act with integrity, whatever the issue at hand — that goes without saying. We also want to see a focus on the long term."

When I pressed for more, her spokesman wrote to me, "We're going to have to take a pass on this one."

Public pension funds may be so meek on the issue of inversions because they are conflicted. On one side, the funds say they care about the long term and the implications for their state. Calpers's "Investment Beliefs" policy states that the pension system should "consider the impact of its actions on future generations of members and taxpayers," yet most pension funds are underfunded and, frankly, desperate to show investment returns. Mergers for tax inversion can prop up share prices of the acquirers and clearly help pension funds, at least in the short term, show improved performance.

Some pension managers say that their job is strictly about generating cash for pensioners and that they shouldn't take other issues into consideration. Ash Williams, the executive director and chief investment officer of the Florida State Board of Administration, which manages more than $150 billion, explained it to me this way: "If you're in my seat, you're thinking about it not only as an investor, but you're thinking about it as a fiduciary, which sort of walls out a lot of the political considerations that might otherwise be there." He went on: "You just have to think, 'O.K., so I'm guarding the economic interest of my beneficiary. That is my duty, and that's the start, the middle and the end of it.' "

When I pressed him about whether he felt he needed to consider the impact of these deals on the American tax base, which would affect pensioners, he said, "I guess I'd have to say what's best for the company, what therefore maximizes the value of the ownership relationship I have to the company." He added, "I mean, my gut is, as an American you'd like to keep businesses here."

Mr. Williams's approach appears to be the norm among most investors. However, Mark Cuban, the investor and owner of the Dallas Mavericks, took to Twitter with the kind of view you'd expect from a public pension fund, not a free-market evangelist.

"If I own stock in your company and you move offshore for tax reasons, I'm selling your stock," Mr. Cuban wrote on Twitter in July. "When companies move offshore to save on taxes, you and I make up the tax shortfall elsewhere," he said, encouraging investors to "sell those stocks and they won't move."

Last month, Shirley K. Turner, a Democratic New Jersey state senator, introduced a novel piece of legislation in an effort to make inversion deals less attractive. She proposed that the state's pension board be forbidden to invest in companies that are involved in inversion deals. She said the state of New Jersey "ranks sixth among public pension funds investing in corporate inverter AbbVie, holding more than 1.5 million shares of the company's common stock, valued at $81.9 million."

It is unclear how such legislation would work. For example, would the state immediately be forced to sell its holdings in a company involved an inversion?

Not all officials who oversee pension funds are focused only on the immediate bottom line.

"Our fiduciary duty to our members is to vote our economic interest — and that means making an individualized determination of whether a given transaction is in our best interests as long-term share owners," said Scott M. Stringer, the New York City comptroller. "As a result, we don't merely look at the offer price on the day of closing but instead take into consideration everything from potential influence on shareholder rights to whether a merger places short-term gain over long-term growth." Still, as Pfizer, one of the largest companies in New York, has continued to contemplate a merger with AstraZeneca that would make the combined corporation a British entity, neither Mr. Stringer nor any other investor acting on behalf of pensioners has spoken out. Perhaps not surprisingly, the only people who appear to be concerned are a small but growing group of politicians in Washington.

After Burger King announced its deal with Tim Hortons, Senator Carl Levin, Democrat of Michigan, declared, "If this merger goes through, there could well be a strong public reaction against Burger King that could more than offset any tax benefit it receives from a tax avoidance move," suggesting customers take up the cause.

Indeed, the Walgreen Company, which had been considering a tax inversion transaction with Alliance Boots of Britain, voted against changing its corporate citizenship because the American pharmacy chain's board and management worried about an outcry from customers, according to people close to the board, and were concerned that pressure from customers could spill over to the government.

Where are the investors? Happily watching their returns rise. When I asked Mr. Williams, the Florida pension manager, what he would do if he had to vote on a deal involving a Florida company pursuing an inversion that would hurt the state's tax base, he sighed and said: "This issue is new enough — and fortunately, at this point, it's small enough — that it hadn't reached those dimensions. And I would just hope that we can get something done at the policy level to resolve it. That's the best outcome."

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