Fidelity's Nicholls looks to consultants on China Special Sits

Fidelity's Dale Nicholls is making greater use of third-party consultants to mitigate the risk of company fraud, which has been a problem for the China Special Situations trust in the past.

In 2011 Nicholls' predecessor Anthony Bolton was forced to admit that two of his companies had been accused of fraud. China Integrated Energy lost nearly its entire market cap value after being accused of fraud by short-sellers, while ChinaCast Education was hit by the alleged theft of business licenses by its former CEO. Both companies listed on the US NASDAQ exchange through reverse IPOs, allowing them to avoid the due diligence usually required of new firms. At the time, Bolton said he would look at introducing more on-the-ground analysis of companies, and this strategy is conti...