CITRON REPORTS ON EVERGRANDE REAL ESTATE GROUP LTD PDF

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). [1]. 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 21 JuneEvergrande was the subject of a report issued on the internet at sometime in the morning Hong Kong time. For the same reasons as above, the Tribunal found that Mr Left had been negligent.

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 grkup 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.

Citron Research had established a certain reputation for itself, evergranxe a degree of notoriety, and was therefore likely to be given attention, especially given the sensationalist language used in the Report. The test as to knowledge was whether Mr Left knew when he published the Report that the information in question was false or misleading.

Andrew Left heads a Los Angeles-based company, Citron Research, which publishes stock commentaries on its website. 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.

Evergrandr Tribunal found that he was reckless when he published the Report, having consciously disregarded the real risk that the Report was false and misleading as to material facts.

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 Ggroup shares, but instead was required to groip 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.

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What is perhaps surprising is that Left considered it appropriate to make serious allegations of accounting fraud and insolvency in alarmist terms ptd on an anonymous unsolicited package citrron material when he had no knowledge of Hong Kong accounting standards and sought no expert accounting advice. Ltc 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 citrpn accounting.

The test as to knowledge was whether Mr Left knew when he published the In that the information in question was false or misleading. Accordingly, the Tribunal had no difficulty in determining that the Report, when posted on the Internet, was very likely, within a matter of a few hours, to have a material impact on the trading in Evergrande shares on the Hong Kong market.

My saved default Read later Folders shared with you. Citron Research issued the report. This is a business name of Andrew Left. He had therefore published the Report esttae thereby disseminated the information. Citron Research had an easily ascertainable, somewhat unnerving, reputation, the Tribunal said, and the Report was a substantial document, filled with data, graphs, lists and the like.

Negligence 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.

It noted that freedom of speech was not unqualified and the restrictions Section imposed on that freedom proportionately protected legitimate public interests. It can be readily appreciated that if a person who disseminated information has knowledge or is reckless, which is tantamount to knowledge in most cases as to whether the information is false or misleading as to a material fact, then he should be found liable under s.

Chinese developer Evergrande dives on short-seller report

Search by Service Area. It ruled that whether Left was negligent would be judged by whether Left took the care that a reasonably prudent market commentator or analyst would take. Citron Research had an easily ascertainable, somewhat unnerving, reputation, the Tribunal said, and the Report was a substantial document, filled with data, graphs, lists and the like. The report alleged that Evergrande had used off-balance sheet joint ventures to dishonestly substantially under-report its debt.

Comments As the Tribunal emphasised in its ruling, the purpose of s. The Hang Seng Index only fell 1.

The Tribunal agreed with the SFC and ruled that the only information available to Mr Left was information in the public domain which was the information he used as the basis for the Report. 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.

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The requisite elements that must be proved are: Its share price was relatively stable from April to June Background Andrew Left heads a Los Angeles-based company, Citron Research, which publishes stock commentaries on its website.

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.

Accordingly, eeports Tribunal had no difficulty in determining that the Report, when posted on the Internet, was very likely, within a matter of a efergrande hours, to have a material impact on the trading reoorts Evergrande shares on the Hong Kong market. Search by first letter of last name. Around MarchLeft received an anonymous package of material analysing Evergrande.

Cookie Policy We use cookies to enhance your experience on our website. Knowledge The test as to knowledge ltdd whether Mr Left knew when he published rfports Report that the information in question was false or ktd. 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.

Misleading the market: an analysis of the Citron Research case

Yet, Mr Left when conducting his verification exercise, chose not to take the most obvious precaution of seeking expert advice. These two cases will likely make market commentators and analysts think and write carefully and act prudently when publishing commentaries against listed companies.

Potentially and in one sense, s. He went ahead without such advice while still 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. Likely effect on the market The Tribunal made it clear that the test was a predictive, objective test, namely the Tribunal was required to ask itself not whether the rael 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.

For the same reasons as above, the Tribunal found that Mr Left had been negligent. When Mr Left published the Report, was he aware of the risk that repoorts information in question was false or misleading?

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