Moody’s Corp broke Hong Kong’s regulatory code of conduct when it issued a 2011 report on public companies, a High Court appeal hearing ruled yesterday.
Moody’s Investors Service was appealing a decision by the Hong Kong Securities and Futures Appeals Tribunal that resulted in a HK$11 million (US$1.4 million at the current exchange rate) fine.
The panel affirmed in March last year an action against the company by the Hong Kong Securities and Futures Commission (SFC) for breaching the code of conduct when it published a report on dozens of Chinese companies.
That ruling alarmed investors and analysts, concerned that it could strangle critical commentary about Hong Kong’s markets.
The report highlighted warning signs about weak corporate governance, opaque business models and unclear financial reporting at the companies.
The tribunal said in March last year that the note qualified as a ratings notice, which meant it should be held to higher standards.
At a January appeal hearing, Adrian Huggins, lawyer for the New York-based credit-rating firm, told the judges that Moody’s had considered using the note’s contents as part of a credit-review report, but “decided not to as it was inappropriate.”
A bright line between regulated and unregulated activities had been blurred by the regulator, Huggins said at the time.
An SFC spokesman declined to comment. A representative for Moody’s could not be reached for comment.
Shares plunged and borrowing costs jumped for some of the companies, including Winsway Coking Coal Holdings Ltd (永暉焦煤) and West China Cement Ltd (西部水泥), in the days after the note was published.
Moody’s said the research was a primer on possible credit-rating reviews, rather than a review itself.
A first of its kind in Hong Kong, the tribunal’s decision was seen as having wide-ranging implications for how ratings companies operate in the former British colony, especially as it came at around the same time as an SFC action against US short-seller Andrew Left.
In August last year, Left was found culpable of market misconduct for a report that his Citron Research firm published that was critical of real-estate developer Evergrande Real Estate Group Ltd (恒大集團). He was fined HK$6.9 million and banned from the Hong Kong market for five years.
Left lost an appeal against the ruling in January, and a second appeal hearing is still pending.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
Gold surged to a fresh record on Friday, fueled by US dollar weakness and low interest rates, while silver headed for its best month since 1979. Spot bullion is up more than 10 percent this month, as US real yields lingered near record lows. While the ferocity of rallies in gold and silver cooled in the middle of the week, most market watchers predict there might be more gains ahead. Both metals have added about 30 percent this year, with gold and silver exchange-traded funds boosting holdings to a record, as concern about the fallout from the COVID-19 pandemic fuels demand for
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion
‘ONE-STOCK SHOW’: Turnover hit an all-time high as TSMC continued to determine the local market’s direction and surpassed Visa in market capitalization The TAIEX early yesterday hit an all-time intraday high on the back of soaring Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares, before tumbling back to the previous day’s close as the contract chipmaker could not single-handedly prop up the index. The TAIEX rose more than 400 points in the first 20 minutes of trading to hit a record 13,031.7 points, but later pared its gains to close down 0.01 percent at 12,586.73. Turnover was NT$343.252 billion (US$11.63 billion), the highest in the Taiwan Stock Exchange’s history. TSMC continued to dictate the market’s direction, as its early surge by the daily