New | Hong Kong finds Citron Research’s Andrew Left guilty of issuing false report in 2012 on Evergrande
Short seller may be barred from trading Hong Kong equities for up to five years
The maximum penalty for the misconduct is a ban from trading Hong Kong’s stocks for up to five years and have to hand in the profit he has made. The tribunal will issue its ruling at a later date, according to the tribunal ruling report released on Friday.
This is the first time the Hong Kong tribunal, chaired by Mr Justice Michael Hartmann, has made a ruling against a short seller report, and also marks the Securities and Futures Commission’s first such action against activist short-selling firms.
Short sellers sell borrowed shares and then buy them back at lower prices, pocketing the difference. They find holes in the books of listed firms and then rely on securities traders and the media to spread the word.
The SFC investigation found Left made a profit of about HK$1.7 million by shorting 4.1 million Evergrande shares before issuing a scathing report on the company on June 21, 2012. The company has now been renamed China Evergrande Group.
Shares in Evergrande slumped 19.6 per cent following the release of the report before closing the day down 11.4 per cent, against a 1.3 per cent drop in the benchmark Hang Seng Index.
