We have been short S30 since May 2019, and it has been a long and strange journey. We analogize the present situation to this: Imagine if you thought your partner is cheating on you with another. You arrive at your house at a moment you believe the cheating is taking place, and see your partner’s car in the driveway, along with an another, unknown car. You enter and stop outside your shared bedroom. The door is closed, and you hear sounds from inside indicating both parties are putting in gold medal performances. But the door is locked – you cannot open it. You are now EY.
It did not surprise us to learn this past Friday that EY had not issued an audit opinion for S30’s 2020 financials. Nor did it surprise us to read yesterday that EY found problems that indicated S30’s financial statements could contain “undetected misstatements [that] may be both material and pervasive”, and that when it attempted to investigate them further, S30 impeded EY.  When S30 engaged Didier Kling Expertise & Conseil and Deloitte Finance to conduct reviews, S30 was able to control – and thus limit and divide – the scopes of those firms’ work. However, S30 was not able to control EY’s scope of work during its audit, and thus S30 chose non-cooperation when push came to shove. Not that we needed it, but this outcome bolsters our confidence that S30 is likely involved in money laundering and is a fraud. It should be obvious that what lies behind the doors EY could not open is highly problematic for the company.
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