HK short seller attacks prompt due diligence focus

Author: Ashley Lee | Published: 20 Nov 2014

Short sellers and a number of incidents on initial public offering (IPO) information suggest that more thorough pre-deal diligence is needed in Hong Kong’s capital markets.

It’s been just over a year since Hong Kong implemented its sponsor regulations on October 1 2013. They were far-reaching and ambitious, calling for sponsor criminal liability if there was anything materially false in a prospectus.

A year later that ambition hasn’t yet translated into reality. In September Tianhe Chemicals was attacked by short seller Anonymous Analytics only three months after it listed in June. Last month, China Tuna pulled its IPO after its prospectus revealed that the company flouted international tuna fishing limits.

Some have urged regulatory intervention. "There has to be someone – preferably the regulatory authorities –...