WASHINGTON – Two major companies in a prominent $1.4 billion Asia investment fund managed by banking giant Morgan Stanley failed to file their financial statements on time, freezing trading in their stocks. Such delays are generally considered worrisome for a company's investors, which include U.S. pension funds and college endowments.
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The companies — Tianhe Chemicals Group Ltd. and Sihuan Pharmaceutical Holdings Group Ltd — both blamed the delay on incomplete audits. Though both companies could eventually earn auditors approval, accounting experts say that such holdups are a worrying sign.
Accounting trouble at the companies would be a black eye for Morgan Stanley, which pitched investors on its ability to improve the companies' management.