HONG KONG: SFC commences proceedings for Hong Kong short selling violations

Tuesday December 23 2014

The Securities and Futures Commission has commenced proceedings in the Market Misconduct Tribunal (MMT) against Mr Andrew Left of Citron Research, alleging market misconduct involving the publication of a research report on Evergrande Real Estate Group Limited in June 2012.

The SFC alleges that on 21 June 2012, Left published a report on Citron Research’s website that contained false and misleading information about Evergrande. The report stated, among other things, that Evergrande was insolvent and had consistently presented fraudulent information to the investing public. The share price of Evergrande fell sharply on the same day following the publication of the report

The SFC also alleges that shortly before publishing the report, Left short sold 4.1 million shares of Evergrande which he subsequently bought back, making a notional profit of over $2.8 million. Left made a total realised profit of approximately $1.7 million.

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