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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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Share Facebook Twitter Linked In. It ruled that Evergrande had not used trust financing as a means of concealing off-balance sheet debt, reorts as a means of financing the buying of land. 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.

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But, a review of the decision suggests that it is a cautious consideration of the reportw that false or misleading statements about listed companies pose for investors who can be panicked into trading decisions based on the resulting false or misleading information. Counsel for Mr Left repogts 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.

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. Later, Evergrande held a telephone conference with analysts again denying the allegations.

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. Around MarchLeft received an anonymous package of material cktron Evergrande. By continuing to use this website, you agree to the use of these cookies.

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The Tribunal concluded that, even without any form of promotion, it was likely – indeed almost inevitable – that the Report would have become known to the Hong Kong market within a very short time of its publication. The Tribunal said that the right of freedom of expression is not an absolute right and referred to journalists as an example.

Its share price was relatively stable from April to June Register now for your free, tailored, daily legal newsfeed service. The Tribunal explained the tests involved in proving knowledge, recklessness or negligence and ruled in relation to each as follows.

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.

Left short sold Evergrande shares from 6 to 19 June. 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.

Citron Research had established a certain reputation for itself, with a degree of notoriety, and was therefore likely to be given attention, especially given the sensationalist language used in the Report. We use cookies to enhance your experience on our website. The test in respect of negligence which is objective was in compiling and publishing the Report, did Mr Left exercise that level of care to avoid the inclusion of false or misleading information as to material facts that is realistically required of a reasonably prudent person carrying out the function of a market commentator or analyst?

Chinese developer Evergrande dives on short-seller report | Reuters

reorts The MMT considered that, as someone who held himself out as an expert in detecting corporate fraud, Left should either repofts sought expert accounting advice or sought comment from Evergrande, as regulated analysts often do. The 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 requisite elements that must be proved are: There was no dispute that Mr Left headed the research team who prepared the Report and had authorized its dissemination on the Internet, by giving the relevant instructions.

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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. 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.

View Binder — add content to your binder to download and print: The Tribunal found that Mr Left had engaged in market misconduct, contrary to s. On 21 June, he bought shares to cover his short position. It appears that the Tribunal was referring to the law evergrsnde defamation as affecting the right of freedom of expression.

Hong Kong October 27 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. What is perhaps surprising is that Left considered it appropriate to make serious allegations of accounting fraud and insolvency in alarmist terms based on an anonymous unsolicited package of material when he had no knowledge of Hong Kong accounting standards and sought no expert accounting advice.

Hong Kong Capital Markets Litigation.