Legal actions initiated against Citron

Posted by The Citron Fraud Examiners on October 10, 2012 under The Truth | 480 Comments to Read

Qihoo plans legal action against Citron

Qihoo 360 Technology Co. Ltd. (Qihoo 360 or the Company, NYSE: QIHU), a leading Internet company in China, today initiate legal procedure against Citron Research and its main contributor Mr. Andrew Left (“Citron”). The Company has sent a letter to Citron and demands Citron immediately cease and desist from committing any and all improper and/or illegal activities in relation to its untruthful publications or statements regarding Qihoo 360. Without limiting the generality of the forgoing, the Company demands Citron (1) correct or remove those untruthful sections in the Publications within ten (10) days upon the receipt of the letter, and (2) apologize to Qihoo 360 for Citron’s undue activities. Qihoo 360 reserves its right to pursue further legal remedies.

Qihoo sues Citron

Source: Qihoos announcement on Sina Weibo

 

Kai-Fu Lee initiates legal action against Citron

I wrote a fact-based report challenging Citrons reports on China search companies.  Citron has not explained any of the errors I brought up, but instead has attacked me personally with accusations that have no factual basis and are not truthful.  Such malicious statements have been deliberately and publicly made in order to damage my reputation, in an attempt to avoid address my criticisms of Citrons report.  I have no choice but to file a lawsuit against Citron and Mr. Andrew Left.

 

Letter from Chinese Top Web Game Companies to Citron

Posted by The Citron Fraud Examiners on September 13, 2012 under The Truth | 483 Comments to Read

We, a group of nine Chinese gaming companies, join forces to take up Citron on its recent challenge that Qihoo’s ARPU claim of 400 RMB is fraudulent, “demonstrated” by Citron’s comparisons with other gaming companies in its reports. We prove here that Citron’s analysis lacked basic understanding of the Chinese gaming market. Citron compared different types of companies against each other, and didn’t even understand how ARPU is measured (!). We pooled our gaming statistics together to form a trusted third-party validation of gaming ARPU for Qihoo and its true peers, and we found that: 1) Qihoo’s ARPU is just about average in a group of five comparable gaming platform companies, and 2) The average ARPU of a large number of popular games on the Qihoo platform is also in line with Qihoo’s reported number. Like the earlier reports published on www.citronfraud.com, this report once again shows that Citron knows very little about Chinese market and companies, and that its analysis is as amateurish as its claims outrageous.

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Response to Citrons Legal Threat

Posted by The Citron Fraud Examiners on under The Truth | 641 Comments to Read

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Media Reports Blast Citron for Erroneous Reports

Posted by The Citron Fraud Examiners on September 12, 2012 under The Truth | 89 Comments to Read

WSJ-Chinese Backlash Hits Short Seller

Bloomberg-Chinese Executives Sign Letter Denouncing Short Sellers

China Daily-Industry leaders protest Citron Research's reports

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Kai-Fu Lees Ten Questions for Citron

Posted by The Citron Fraud Examiners on September 5, 2012 under Replies to Citron | 417 Comments to Read

by Kai-Fu Lee

Citron has used (provably incorrect) personal attacks on me to shift investors’ attention away from the core issue – that Citron lacks basic understanding about China, and fabricated or exaggerated false data to mislead investors. Below are ten questions for Mr. Andrew Left. Please answer them directly and don’t mince words.

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Kai-Fu Lees 4th Letter to Citron, Sep 4

Posted by The Citron Fraud Examiners on September 4, 2012 under Replies to Citron | 652 Comments to Read

Again, Citron chose to continue to evade Dr. Lee’s questions and criticism on their erroneous report and, under attack by the 61 business leaders for fraud, put together an attack on Dr. Kai-Fu Lee today.  They had four main points, and here are Dr. Lee’s responses:

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WSJ Report on Citron: Chinese Backlash Hits Short Seller

Posted by The Citron Fraud Examiners on September 3, 2012 under The Truth | 616 Comments to Read

Chinese Backlash Hits Short Seller

BY LORETTA CHAO

BEIJING—A number of prominent technology leaders in China, including current and former executives from Google Inc. and Microsoft Corp., are mounting an offensive against short seller Citron Research as they protest a spate of what they call unfair and inaccurate attacks on U.S.-listed Chinese companies.

Led by Kai-Fu Lee, former head of Googles operations in the country, a group of more than 60 executives, investors and entrepreneurs signed a letter accusing China-focused short sellers—particularly Citron—of targeting legitimate companies with either no problems or minimal problems, manipulating information to write reports that boldly tell lies, knowing that their American readers have [Link to the full story]

 

Chinese Business Leaders Condemn Citron

Posted by The Citron Fraud Examiners on under The Truth | 735 Comments to Read

Chinese Business Leaders Condemn Citron

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Citron is an “investment analysis company” owned by Mr. Andrew Left, a man with a long record of fraud, deceit, and unlawful behavior. Citrons reports take advantage of the information asymmetry between China and the US, and boldly tell lies, knowing that their American readers have no way of verifying them.  

We are investment professionals and company founders/executives in China.  We are joining together in this effort to expose and condemn the deception and ignorance of Citron and other short sellers like them.  This English website (citronfraud.com) is being created to host this ongoing fight against fraud. 

We urge investors to seek trustworthy professionals for investment advice regarding Chinese companies, and not rely on institutions and individuals with fraudulent history, falsified expertise, and interest conflict.

_____________________

To Whom It May Concern:

For the past few years, a number of “China Short Sellers” have been publishing negative reports on Chinese companies (typically listed in the US).  When these reports were accurate and discovered problems in the Chinese companies, they have helped cleanse the environment.

However, recently some of these China Short Sellers started targeting legitimate companies with either no problems or minimal problems.  Their reports would take advantage of the information asymmetry between China and the US, and boldly tell lies, knowing that their American readers have no way of verifying them.  An example of such a report is Short Seller Citron Research’s report Qihoos entry into search puts SOHU in play, which has been critiqued by Dr. Kai-Fu Lee in his China Short Sellers: Exposing Fraud, or Practicing Fraud? We applaud Dr. Lee’s accurate exposure of Citron’s seven errors of gargantuan proportions.

We are investment professionals and company founders/executives in China.  We strongly believe there is a huge pool of legitimate, exciting, and valuable companies in China.  Citron and other short sellers’ recent efforts to slam legitimate companies and deceive investors are despicable.  We are joining together to expose and condemn the deception and ignorance of Citron and other short sellers like them.  This English website (citronfraud.com) is being created to host this ongoing fight against fraud.

Finally, China is not well understood by foreign investors, so we urge investors to seek trustworthy professionals for investment advice regarding Chinese companies, and not rely on institutions and individuals with fraudulent history, falsified expertise, and serious interest conflict.

Signed on behalf of individuals (listed alphabetically within each group): Read more of this article »

 

Kai-Fu Lees 3rd Letter to Citron, Sep 3

Posted by The Citron Fraud Examiners on under Replies to Citron | 623 Comments to Read

Dr. Lee responds to Citron’s Letter of Aug 31

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In Mr. Andrew Left’s “point-by-point” response dated August 31, 2012, he completely evaded Dr. Lee’s original seven criticisms, and chose to just mince words.  Dr. Lee’s new response below restated the seven clear criticisms, and also pointed out the following new observations from Mr. Left’s letter dated August 31:

  1. Mr. Left’s unwillingness to engage on the direct accusation that he totally misunderstood Sogou’s product line should be taken as an admission of ignorance
  2. Mr. Left’s understanding of a company he recommends is at the level of an analyst who says : “Buy Microsoft because the Xbox+Office product will beat PlayStation”.
  3. Mr. Left made a new statement about market share that is off by a factor of 2-3X!
  4. Mr. Left admits that he used what he considered fraudulent data in his recommendation, without revealing the “fraud” to new readers.
  5. Mr. Left comically restates “a valuation of $697M” as “just an opinion that $200M is too low”.
  6. During a period where company’s market share went from 0% to 10%, while another stayed flat at 4.5%, Mr. Left concludes the two companies’ valuations should increase by exactly the same amount.

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On August 31, 2012, Citron’s Andrew Left issued a response to my two letters and seven points.  Below are my point-by-point rebuttal to him: Read more of this article »

 

Kai-Fu Lees 2nd Letter to Citron, Aug 30

Posted by The Citron Fraud Examiners on August 30, 2012 under Replies to Citron | 436 Comments to Read

August 30, 2012

Dear Mr. Left:

Thank you for responding to my letter.  To remind you, the main points in my letter were:

  1. Citron lacked basic understanding of Chinese search market.
  2. Citron misunderstood Sogou products and combined two products into one.
  3. Citron compared apples to oranges in its web traffic analysis, and did so unfairly.
  4. Citron omitted critical data in its financial comparisons of Sohu and Qihoo.
  5. Citron did not understand search monetization and zeroed $98M of revenue.
  6. Citron’s video analysis was ludicrous, and missed obvious business issues.
  7. Citron’s adding market cap from one company to the next was wild and ridiculous.

In your response, you chose only to say that I “did not properly represent” your statements in (4), and for the other six points, you said you did not want to “go back and forth”, and respected my knowledge. Since you have implicitly acknowledged the other six points, I also agree it’s not necessary to “go back and forth” on point (4).

Interestingly, you chose to bring up several other issues which had NOTHING to do with my letter, so I see no need respond. Perhaps someone else will take you up on the 100K RMB offer, and if they do, I hope they will donate the money to an anti-fraud cause.

Kai-Fu Lee

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REFERENCE | Citron Research: Open letter to Kai-Fu Lee Aug 30 [PDF]

(This letter was originally posted on xueqiu.com)