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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Left has since criticised the MMT lyd as an attack on freedom of speech and free flow of information in financial markets. Hong Kong October 27 It noted that freedom of speech was not unqualified and the restrictions Section imposed on that freedom proportionately protected legitimate public interests. But, a review estatee the decision suggests that it is a cautious consideration of the risk that false or misleading statements about listed companies pose for investors who can be panicked into trading decisions based on the resulting false or misleading information.
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 estqte person carrying out the function of a market commentator or analyst? Repotrs 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.
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Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world. Citron Research had established a certain reputation for itself, with a degree of notoriety, and was therefore likely to be given sstate, especially given the sensationalist language used in the Report.
It also rejected that the MMT erred in finding that Left must have known that his allegations required accounting expertise.
He had therefore published the Report and thereby disseminated the information. 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.
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Likely effect on the market The Tribunal made it clear that the test was a predictive, objective lrd, namely the Tribunal was required to ask itself not whether the posting of the Report on the Internet did have an evergradne on the Hong Kong market by inducing the sale or purchase of Evergrande shares, but instead was required to lltd 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.
Knowledge, recklessness or negligence The Tribunal explained the tests involved in proving knowledge, recklessness or negligence and ruled in relation to each as follows. Section 1 of the SFO prohibits dissemination of false or misleading information about securities or futures that is likely to induce another person to trade in the securities or affect the price of the securities. Previous Item Next Item.
Misleading the market: an analysis of the Citron Research case | CSJ HKICS
The MMT rejected this, ruling it would not protect financial markets sufficiently from false or misleading information. 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.
Around MarchLeft received an anonymous package of material analysing Evergrande. Background Andrew Left heads a Los Angeles-based company, Citron Research, which publishes stock commentaries on its website.
etsate The requisite elements that must be proved are: Citron was previously unknown in Hong Kong. Did he nevertheless, although aware of a and b above, go ahead and publish it? This was its first report on a Hong Kong listed company. Its share price was relatively stable from April to June This is a no 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 evergrwnde.
My saved default Read later Folders shared with you. 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. Yet, Mr Left when conducting his verification exercise, chose not to take the most obvious precaution of seeking expert advice.
On 22 June, Evergrande issued a longer announcement rejecting the allegations. The Tribunal found that Mr Left had been reckless in his publication of the Report.
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?
Later, Evergrande held a telephone conference with analysts again denying the allegations.
The Thomson Reuters Trust Principles. The test as to knowledge was whether Mr Left knew when he grou the Report that the information in question was false or misleading. The Tribunal found that Mr Left had engaged in market misconduct, contrary to s.
The requisite elements that must be proved are: Follow Please login to follow content.