HONG KONG: Short Seller banned from trading for 5 years for publishing false and misleading claims

Friday October 21 2016

The Market Misconduct Tribunal (MMT) has ordered that Mr Andrew Left of Citron Research be banned from trading securities in Hong Kong for the maximum period of five years after finding him culpable of disclosing false or misleading information inducing transactions under the Securities and Futures Ordinance (SFO) in the publication of a research report on Evergrande Real Estate Group Limited (Evergrande) in June 2012.

The MMT also issued a cease and desist order against Mr. Left. Mr. Left is ordered to disgorge his profit of HK $1,596,240 from shorting shares of Evergrande and to pay the Securities and Futures Commission’s (SFC) investigation and legal costs.

The penalties follow the tribunal’s August ruling that Mr Left’s Citron Research published a 2012 report that was “false and/or misleading as to material facts or through omission of material facts.”

The SFC determined that Mr. Left began selling shares short in China Evergrande Group two weeks prior to the publication of the articles and began buying them back on the day of publication, resulting in net profit trades of HK$1.6m. Share prices dropped 20 percent on June 21, 2012, when Left published his note claiming that the company used accounting tricks to disguise its insolvency.

Please click the following link for our previous Article on information on the ruling of 26 August 2016.

Please click the link at the top of the page for SFC announcement on the sanctions imposed.