Ann: Bonitas litigation, page-313

The issue is on the radar of ASIC chairman James Shipton who dealt with similar issues during his time working as executive director and commission member of the Securities and Futures Commission of Hong Kong from 2013 to 2016.Shipton was at the SFC in 2014 when it fined and reprimanded rating agency
Moody’s Investors Service for publishing a report in 2011 raising concerns about corporate governance at 49 Chinese companies listed in Hong Kong.


The report had a material impact on the market. The SFC said Moody’s failed to have the required procedural safeguards in place to ensure the integrity of the report. It said the report itself was misleading, confusing and inaccurate.Moody’s launched three separate appeals in Hong Kong against the SFC but each one failed.In Australia, the most recent example of a research report of doubtful quality hitting the market was the Bonitas Research document on Rural Funds Group in August. Bonitas, which shorted the stock before the report was released, does not hold an Australian Financial Services Licence.Rural Funds Group shares plunged 42 per cent to $1.36 when the Bonitas document was released but the stock has since risen 50 per cent to $2.05. Accounting firm EY rejected all the claims made in the original Bonitas document.When Bonitas published a response to the EY corroboration of RFF's accounts, the managing director of RFF, David Bryant said it was "deliberately misleading".Chanticleer understands ASIC wants to get global regulatory attention focused on the issue of the quality of reports published and avoid having investors misinformed by distorted or misleading information.