Just as Citron’s Andrew Left told us he would do last week, he has resorted to legal channels in the bitter dispute between himself and numerous Chinese business CEOs and execs. The financial blogger and short seller has issued a demand for an apology and retraction via his lawyers, citing “libelous” allegations by the collective of tech execs, seemingly led by former Google China head Kai-Fu Lee, who set up CitronFraud.com to shoot down Andrew reports on US-listed Chinese stocks – especially tech stocks.
Filed in the US, where the anti-Citron site is hosted (and because Mr. Lee is actually a US national), the demand for a retraction is an inevitable stand-off in the war of words between Citron Research and its China-based detractors who say that the short seller is making a personal profit from attacking Chinese tech stocks like Qihoo (NYSE:QIHU), or inflating ones he fancies like Sohu (NASDAQ:SOHU). Andrew, for his part, defends his record in spotting dodgy Chinese stock. Of his 20 China-oriented reports, Andrew claims that, “Seven of these companies have been delisted” – and were therefore legitimate targets so as to alert investors to the dangers.
In the legal letter aimed at all 61 co-signees of CitronFraud’s first post, it gives a deadline of three week for the demands, or else “Citron will file suit and will seek to recover general, special and punitive damages.” Andrew makes four demands, including:
Immediately issue a retraction of your libelous letter/communication and apologize for having published such false and unfounded statements. Immediately remove the name of the website “citronfraud.com” and cease using the domain “citronfraud.com”. Cease and desist in the future from making other false and misleading statements that Citron has lied to, deceived, or defrauded investors.
Also, in an email sent to interested parties including TiA, the Citron man claims to have been the victim of “massive Distributed Denial of Service Attacks over the last two days” on his Citron Research site. He explains:
While it is not yet possible to prove the source of this effort to block our communications, it appears to Citron that it is more than coincidence that our website, which has operated flawlessly for years, has been obstructed three times in the last two days – specifically at moments following new posts, and/or Tweets by Citron’s editor.
It’s likely that the DDoS mischief is coming from random patriotic hackers (yes, that’s a thing) who have decided to go ‘Anon’ on Citron, as the whole China versus short sellers battle has taken on a them versus us, and nationalistic, tinge.
We’ll have to wait and see how the retraction demand is taken by Kai-Fu Lee and the other co-signees, which includes Qihoo’s CEO Zhou Hongyi. So far today, Lee has not taken to his Weibo account to comment. While it’s conceivable that the repeated “fraud” claims that got personal, and even got included in the URL of the collective’s site, might need to be amended, we hope that short sellers – who often make personal profits from the stocks they bash, unfettered by things like journalistic codes of ethics – will still be monitored and fact-checked.