Hong Kong regulator SFC vows action on false short-seller reports
Regulator denies cases against US short seller and Moody's were to curb independent research
The Securities and Futures Commission vows tough action on short sellers using misleading reports to drive stocks down and profit.
The SFC declined to say if it would take action on individual cases, but executive director of enforcement Mark Steward has publicly spoken out about the crackdown on misleading research reports targeting locally listed companies.
"The investing public needs protection from the cynical use of false or misleading publications that drive down share prices for the wrong reasons and there should be accountability for shoddy research, especially when it affects stability in our markets," Steward told a legal seminar last week.
He highlighted the SFC's regulatory action against an alleged "misleading and false" research report issued by US short seller Citron Research's head Andrew Left against mainland developer Evergrande Real Estate Group in 2012 and a fine on a separate report issued by credit rating agency Moody's Investors Service in 2011 for raising red flags on a number of mainland companies listed in Hong Kong.
"Both proceedings have garnered some eccentric reactions, including claims that the SFC is seeking to chill independent research into mainland companies. Nothing of course could be further from the truth," Steward said. "Only wrongdoers should feel any chill from these objectives."
Singapore and Taiwan are also toughening their stance against short sellers. Singapore-listed commodity trader Noble Group last month became the latest short-selling target in the city state.