The SFC v citron began hearing
Price is not frequent features of Spider-Man in part discussions or activities of short sellers. On Monday, however, the superhero made an appearance in a case before a court in Hong Kong.
The body is charges hearing of misconduct of market by Andrew left, United States corta-vendedor better known by his recent high-profile battle with Valeant, United States pharmaceutical.
The case of Hong Kong is one of the first times that a regulator has carried out a case based on the public comments of someone who is not a licensed financial professional. Short-sellers and other commentators are carefully case about concerns that a failure could have a "chilling" effect on their ability to freely comment on the above-mentioned populations.
Debates on the merits of selling inevitably resort to freedom of expression arguments. In the case of Valeant, Mike Pearson, its Executive Director, left Mr compared someone "who works in a theater full of people and falsely yell fire" - the famous limits to free expression identified by the Supreme Court of Justice Oliver Wendell Holmes.
Before Lord of the left these criticisms: "shouting fire in a crowded theater is very different from a foot in a theatre, smelling smoke and screaming, ' Hey everybody, there could be a fire '."
The short seller was not in Hong Kong if itself Monday for the opening of the case brought by the Securities and Futures Commission. In the heart of the 2012 report is located on the left of the Lord and his group, investigation of Citron, alleging fraud and accounting errors in the Evergrande, a China property group. Evergrande strongly denied the claims.
The SFC alleges that lemon report contains false or misleading information about Evergrande. Showing the misconduct, a civil crime that can lead the prohibitions and orders to throw earnings, means to show the defendant knowingly false or misleading statements, or was reckless or negligent in doing so - and demonstrate that the information is likely to induce to buy or sell the underlying security.
Spider-Man, or rather his alter ego Peter Parker, was raised by the defence on the left of the Lord. "Laurence Li, to represent him, said he hoped that case avoid enshrining what he called the"argument from Spider-Man"that can impose a scale of responsibility in financial commentators depending on its next public."
Mr. Li was trying to avoid a ruling that would show the warning given to the young Peter by his uncle Ben, who said that "with a greater influence comes greater responsibility".
"It would be our proposal that the law makes that", said Mr Li.
Justice Michael Hartmann, presiding over the Court and apparently not a fan of Spider-Man, took a different view after the reference was explained to him.
"Is not really the influence of the person that matter, is the fact that what is published is likely to affect the stock price, which means the most influential are, more likely to affect the stock price," said.
The case is scheduled to last for two weeks. Opening arguments introduced a new fact: the report of Evergrande Citron was triggered by a tip-off anonymous, in the form of a package of papers, to the left of the Lord in his house. The SFC alleges that the package is a large part of the final report.
"We're not suggesting are identical but the report of Citron, we submit, is based substantially on this package," Peter Duncan, acting for the SFC, said the Court.
Citron hearing comes as Hong Kong commentators expect the verdict of another case of SFC with a report from Moody's, the ratings agency. There, the regulator said that the report was a "shoddy" work of qualifications, which is done under license. Moody's said the report, whose study of the "red flags" accounting in Chinese enterprises was especially accurate in retrospect, was not the work of ratings.
Search for controller of the two cases has troubled hedge funds and other short sellers and the analyst community more generally.
David Webb, an activist of the corporate governance in Hong Kong, warned when the two investigations made public that "free markets depend on freedom of expression and the free exchange of opinions and analysis, if it turns out to be right or wrong".
The left case will be watched carefully, with or without more superheroes.