“There tends to be an inverse relation between the honesty and the litigiousness of the company. Maybe it’s because the only weapon you have is the pocketbook.”
A string of Australian companies have been targeted by offshore short sellers over the past year. And at least two have referred their claims to regulators.
Treasury Wine Estates, the owner of Wolf Blass and Penfolds wine labels referred claims against it to the Australian Securities and Investment Commission in August.
Rural Funds Group (RFF), which is taking legal action against Texan short seller Bonitas Research in the NSW Supreme Court, confirmed that it has also lodged a complaint with the regulator.
WiseTech is the first ASX-listed target by J Capital which has previously focused on Chinese groups.
J Capital, which is run by former Labor candidate for the federal seat of Wentworth, Tim Murray, claimed in a research note released on Wednesday that WiseTech had overstated its profits by $116 million — or 178 per cent — since listing on the Australian Securities Exchange in April 2016.
On Friday, WiseTech said it “rejects entirely the allegations of financial impropriety and irregularity contained in the document”.
“We would ask the relevant regulators and government, not just for ourselves but for the many listed Australian corporations regularly subjected to similar attacks, to consider the complex issues raised and damage caused by reports of this type,” said WiseTech founder and chief executive Richard White in the statement.
Earlier on Friday, brokerage firm Evans and Partners released its own analysis that it claims “destroys” J Capital’s short thesis.
WiseTech shares are set to recommence trading on Monday. The stock fell more than 10 per cent to $30 before trading was halted on Thursday.
On Sunday, an ASIC spokesman said it’s general position is that, “a company is able to respond to detailed allegations with detailed answers via the ASX and in that way the market and market observers can form their own view.”
Mr White warned last week that “all shareholders should be aware that unconscionable attempts to manipulate the market exist and may continue.”
RFF has accused Bonitas and its founder Matt Wiechert of “commercially misleading conduct” by alleging Rural Funds Group “engaged in fraud.”
Mr Wiechert is the co-founder of Glaucus Research which launched a withering assault on Australia’s Blue Sky Alternative Investments last year.
RFF has also been targeted by Hong Kong-based research group Bucephalus with similar allegations. RFF has not ruled out legal action against the research group.
Kylar Loussikian is The Sydney Morning Herald’s CBD columnist.
Colin Kruger is a business reporter. He joined the Sydney Morning Herald in 1999 as its technology editor. Other roles have included the Herald’s deputy business editor and online business editor.
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