to these bribes, subsequent land purchases, and related real estate construcnon acnvines, Evergrande has employed a Source: Evergrande filings, Citron research. Note: Evergrande reported 35bn of equity including minority interests. .. Hunan Xiongzhen Investment Co., Ltd (湖南雄震投資有限公司). . Andrew Left heads a Los Angeles-based company, Citron Research, an in- depth analytical report on Evergrande Real Estate Group Ltd, now. Evergrande Real Estate Group Limited concerning the Group in the Report. relation to a report (the ”Report”) issued by Citron Research.
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On 22 June, Evergrande issued a longer announcement rejecting the allegations. This is a business name of Andrew Left. Around MarchLeft received citfon anonymous package of material analysing Evergrande. Login Register Follow on Twitter Search. Hong Kong Market Misconduct: Groyp 21 June, he bought shares to cover his short position. The Tribunal concluded that, even without any form of promotion, it was likely – indeed almost inevitable – that the Report would have become known to the Hong Kong market within a very short time of its publication.
By continuing to use this website, you agree to the use of these cookies. He went ahead without such advice while evergraned retaining the sensationalist language of the Draft, language that of itself, he must have appreciated would cause a degree of consternation among members of the investing public.
Comments As the Tribunal emphasised in its ruling, the purpose of s. That day, a number of prominent banks issued reports disagreeing with the Citron report.
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Recklessness The test in respect of recklessness which is subjective was: He had been prompted to do so on this occasion by the receipt of an anonymous package containing a lengthy analysis of Evergrande Draftmaking serious allegations of insolvency and fraudulent accounting. Follow Please login to follow content.
The Tribunal concluded that, even without any form of promotion, it was likely – indeed almost inevitable – that the Report would have become known to the Hong Kong market within a very short time of its publication. Did he nevertheless, although aware of a and b above, go ahead and publish it? The MMT imposed on Left orders that:.
Dissemination of information There was no dispute that Mr Left headed the research team who prepared the Report and had authorized its dissemination on the Internet, by giving the relevant instructions.
Recklessness The test in respect of recklessness which is subjective was: The Tribunal rejected such an interpretation and held that the section imposes a duty of care on all persons who choose to disseminate information that is likely to have an impact on the market and the duty of care is owed to the market. Knowledge The test as to knowledge was whether Mr Left knew when he published the Report that the information in question was false or misleading.
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Hong Kong Capital Markets Litigation. These two cases will likely make rpeorts commentators and analysts think and write carefully and act prudently when publishing commentaries against listed companies.
By GMT, Evergrande shares were down Nor did he approach Evergrande for clarification of those matters. Was he further aware that in the circumstances the risk was of such substance that it was unreasonable to ignore it? Search by first letter of last name. The Tribunal explained the tests involved in proving knowledge, recklessness or negligence and ruled in relation to each ciyron follows.
Andrew Left heads a Los Angeles-based company, Citron Research, which publishes stock commentaries on its website. Citron Research issued estatd report. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of evergranre around the world.
The test in respect of negligence which is objective was in compiling and publishing the Report, did Mr Left exercise that level of care to avoid the inclusion of false or misleading information as to material facts that is realistically required of a reasonably prudent person carrying out the function of a market commentator or analyst?
Chinese developer Evergrande dives on short-seller report
ptd Evergrande, the second-largest mainland China developer by sales, has grown aggressively using debt to fund land purchases, though its acquisitions have slowed this year. The Tribunal had no difficulty in concluding that when Mr Left published the Report he consciously disregarded the real risk that the Report, even after his amendments, was false and misleading as to material facts.
Search by Service Area. This is a landmark case, being the first time the Securities and Futures Commission has taken action in respect of short seller reports and stock commentaries and the first decision of the Tribunal on the relevant provision. Nor did he approach Evergrande for clarification of those matters.
The Tribunal said that the right of freedom of expression is not an absolute right and referred to journalists as an example. Citron was previously unknown in Hong Kong. Background Andrew Left heads a Los Angeles-based company, Citron Research, which publishes stock commentaries on its website.
Citron Research had established a certain reputation for itself, with a degree of notoriety, and was therefore likely to be given attention, especially given the sensationalist language used in the Report.
The fact that Mr Left had many years of experience in publishing corporate commentaries, seemingly specializing in hunting down corporate fraud, meant that he must have appreciated that anonymous reports of this kind making allegations of fraud, payment of bribes and other illegal dealings required careful scrutiny.
The requisite elements that must be proved are: At the hearing, Left reargued the point saying that he had been denied a reasonable opportunity of being heard as a result. The MMT rejected this argument saying that Section on its own words applied to everyone who disseminated information that might affect the market and did not restrict liability for negligence to those with a special relationship to the market.
Potentially and in one sense, s. The Tribunal made it clear that the test was a predictive, objective test, namely the Tribunal was required to ask itself not whether the posting of the Report on the Internet did have an impact on the Hong Kong market by inducing the sale or purchase of Evergrande shares, but instead was required to determine whether, having regard to all relevant factors, it was probable at the time when the Report was posted that it would have such an effect.
Andrew Left heads a Los Angeles-based company, Citron Research, which publishes stock commentaries on its website. Citron Research had established a certain reputation for itself, with a degree of notoriety, and was therefore likely to be given attention, especially given the sensationalist language used in the Report.
Counsel for Mr Left argued that negligence was not properly to be read as applying to all persons but only to those persons who, by their actions, had an existing duty and a standard of care to meet and it had to be demonstrated that the person stood in or had assumed a special relationship to the market, e.
On 26 Augustthe Market Misconduct Tribunal Tribunal found that Andrew Left had engaged in market misconduct, having published on a website, a false and misleading report Report regarding a company listed on the Hong Kong Stock Exchange, following which there was a substantial fall in its share price.
It ruled that Evergrande had not used trust financing as a means of concealing off-balance sheet debt, rather as a means of financing the buying of land.