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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Knowledge The test as to knowledge was whether Mr Left knew when he published the Report that the information in question was false or misleading. 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.
The requisite elements that must be proved are: The Tribunal found that Mr Left had been reckless in his publication of the Report.
It ruled that whether Left was negligent onn be judged by whether Left took the care that a reasonably prudent market commentator or analyst would take. The Tribunal rejected such an interpretation and held that the section imposes a duty of care on all persons who choose to disseminate information that is likely to have an impact on the market and the duty of care eveggrande owed to the market.
In the report, Citron said Evergrande was a good opportunity to short sell and that Citron might hold a short position. The Tribunal explained the tests involved in proving knowledge, recklessness or negligence and ruled in relation to each as follows.
On 21 JuneEvergrande was citrkn subject of a report issued on the internet at sometime in the morning Hong Kong time. The Guangzhou-based company sponsors a big-spending Chinese soccer team, Guangzhou Evergrande, that last month hired former Italy national coach Marcello Lippi to manage the team.
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He did not seek any expert advice on the accounting standards that applied to Evergrande or approach the company for comment first. 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. The MMT rejected this, ruling it would not protect financial markets sufficiently from false or misleading information.
By GMT, Evergrande shares were down The Tribunal found that Mr Left had engaged in market misconduct, contrary to s. Search by first letter of last name.
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.
Left reviewed the material, deleted publicly non-verifiable information using the internet evsrgrande company filings, updated the numerical information and published it as his report. Background Andrew Left heads a Los Angeles-based company, Citron Research, which publishes stock commentaries on its website.
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The Tribunal rejected such an interpretation and held that the section imposes a duty of care on all persons who choose to disseminate information that is likely to have an impact on the market and the duty of care is owed to the market. My saved default Read later Folders shared with you.
It noted that freedom of speech was not unqualified and the restrictions Section imposed on that freedom proportionately protected legitimate public interests. This is a rare case, though, of a mainland property company being accused of outright financial mismanagement. The Tribunal said that the right of freedom of expression is not an absolute right and referred to journalists as an example. Knowledge, recklessness or negligence The Tribunal explained the tests involved in proving knowledge, recklessness or negligence and ruled in relation to each as follows.
Evergrande, the second-largest mainland China developer by sales, has grown aggressively using debt to fund land purchases, though its acquisitions have slowed this year. This was its first report on a Hong Kong listed company.
Comments As the Tribunal emphasised in its ruling, the purpose of s. The Thomson Reuters Trust Principles. The test as to knowledge was whether Mr Left knew when he published the Report that the information in question was false or misleading.
Chinese developer Evergrande dives on short-seller report
Share Facebook Twitter Linked In. It remains to be seen as to how the content and the scope of the duty of care which is owed to the market and its standard are to be developed in future cases. On 21 June, he bought shares to cover his short position. 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.
Chinese developer Evergrande dives on short-seller report | Reuters
Left also argued that negligence should be judged differently for those who did not have a special relationship to the market by being company insiders or analysts, as people outside these categories assumed no duty of care to the market.
Register now for your free, tailored, daily legal newsfeed service. The allegations contained in it were direct and combative and of utmost citroj and, whether on more careful analysis, it proved to have no substance, it must on any initial reading have been a disturbing document and one quite capable — even if over a limited period of time- of citton an impact on the market.
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