Date
12 December 2017
Evergrande Real Estate Group saw its share price plunge after Citron Research issued a report which was allegedly based on false information. Photos: Internet
Evergrande Real Estate Group saw its share price plunge after Citron Research issued a report which was allegedly based on false information. Photos: Internet

SFC wants US short-seller probed on false Evergrande report

Hong Kong’s Securities and Futures Commission has called for an investigation into US-based stock market analyst Citron Research for possible market misconduct.

The SFC said the research institution, headed by short-seller Andrew Edward Left, issued a report in June 2012 accusing Evergrande Real Estate Group Ltd. (03333.HK) of fraud in financial reporting.

The property developer’s share price plunged as much as 19.6 percent as a result of the report, which was allegedly based on false information.

Left took a short position on the stock before issuing the report and later pocketed HK$1.7 million profit from the deal.

Left’s report was later pulled out and disappeared from the institution’s website.

The SFC urged the Market Misconduct Tribunal to issue a “cold shoulder” order, which would ban the short seller from trading in Hong Kong, and confiscate the amount he gained from the transaction if it is proven that he misled the market.

Commenting on the case, independent stock market analyst David Webb said SFC’s move is “very interesting”.

But Webb said it is hard to prove that Left knew his report was based on fraudulent information, which is essential in convicting anyone for market misconduct.

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VW/MY/CG

Freelance journalist

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