No it does not mean it is defective. I just got a coolmax ZX-500 to power independent hardware needing only 12V but a lot of current. I found that with the green wire jumpered to ground, my new PSU only begins to spin and everything shuts off.
Still if I plug the main connector into a motherboard then I can power it on with the PC power button and everything works fine, even with my high-current external hardware plugged in.
I am trying to figure out still, how to get it to turn on without the motherboard!