KE Holdings, an integrated online and offline platform for housing transactions and services, provided on Friday an update on the status of its internal review that aims to clarify the report released by a short-seller firm.
Muddy Waters Capital LLC’s report previously reported that “The reason why we are short KE Holdings is that we concluded that the company is suspected of systematic fraud, which we believe is a huge scam. We estimate that its revenue data in the second and third quarters are exaggerated by 77%-96%, and the total turnover of new houses (GTV) is exaggerated by 126%, and the turnover of stock houses is exaggerated by 33%.”
Shortly after the publication of KE Holdings’ report, the company issued a statement suggesting that Muddy Waters’ methodology to capture the number of transactions was wrong.
The audit committee of KE Holdings, consisting of three independent directors, also began an internal review into the key allegations raised in the report with the assistance of third-party professional advisors, including international law firm and forensic accounting experts from a Big-Four accounting firm.
The internal review is now complete. Based on the internal review, the audit committee has concluded that the allegations in the Muddy Waters report are not substantiated.
Stanley Peng, Chairman of the Board and Chief Executive Officer of KE Holdings, stated, “we are pleased that the Audit Committee has completed its internal review. The company enshrines business integrity as one of its core values and DNA and has a zero-tolerance policy towards commercial frauds. We remain confident about our strong business fundamentals, and will strive to achieve our vision of providing quality housing related services to 300 million families in China.”