Short seller Glaucus takes aim at SouFun chairman

PUBLISHED : Saturday, 06 April, 2013, 12:00am
UPDATED : Saturday, 06 April, 2013, 4:36am

US short seller Glaucus Research has accused the chairman of China's biggest property information website of diverting resources from the US-listed firm for personal use through high-priced real estate in New York.

In a report released on Thursday, Glaucus said a charity organisation controlled by SouFun chairman Vincent Mo Tianquan and his wife, Jing Cao, bought the 97-guest room Arden House for US$6.5 million in 2011. The mansion, about 65 kilometres from Manhattan, "was donated by the Harriman family to Columbia University in 1950 to serve as the home of a prestigious foreign policy study group", it said.

The couple formed the non-profit Research Centre on Natural Conservation (RCNC) four weeks before the purchase of the property. Arden House is listed on the national register of historic landmarks and a deed restriction limited the sale of the property to a not-for-profit organisation, according to the report.

Glaucus said a copy of the deed to Arden House stated the registered address of the property's owner was the 16th floor of the AIG Building at 72 Wall Street, New York.

SouFun bought the office floor as its New York headquarters three months after its US$124.1 million listing on the New York Stock Exchange. "The deed clearly states that the owner of Arden House is located at SouFun's New York headquarters and not the registered address of RCNC," the report said.

The registered address of RCNC, according to public records, is 260 Middle Neck Road, in Great Neck, NY. "Multiple data points show that the company resources are used in the operation and administration of the property," the report said.

First, the contact e-mail on the Arden House website is the company e-mail address for SouFun's authorised representative in the United States.

Neither SouFun investor relations director Hua Lei nor investor relations manager Jing Wang replied to e-mailed requests for comment from the South China Morning Post and there was no answer from its Beijing office.

Glaucus said that even if SouFun could prove that the RCNC bought Arden House with charitable donations from wealthy individuals - and no company funds were misappropriated - there was ample evidence to support the notion that company resources were being used to operate the property, even though Arden House was privately owned and controlled by the chairman and his wife. This was a clear violation of Mo's fiduciary duties, it said.