Hong Kong's financial regulators proposed to fine Moody's, the credit rating agency, HK$23 million for preparing a "shoddy and unprofessional" report four years ago. Moody's long-awaited appeal hearings are now in progress.

Mr Justice Hartmann, the chairman of the Securities and Futures Appeals Tribunal, decided in January that the hearing of Moody’s Investors Service Hong Kong Limited’s application to review the Securities and Futures Commission's disciplinary decision against it should be held on 10 and 11 September 2015.

The SFC’s disciplinary decision against Moody’s concerns a report titled “Red Flags For Emerging-Market Companies: A Focus on China” which it published on 11 July 2011. It found fault with 49 out of the 61 Chinese companies it had analysed, looking at their corporate governance, debt ratios, badly drafted financial statements and other things.

The SFC did some analysis of its own, looking at internal memos and emails at Moody's, and concluded that it had reached its conclusions in a slapdash manner. Moody's says that the report only contained 12 errors of calculation and data-entry.

Moody’s has been licensed to carry on Type 10 regulated activity (providing credit rating services) under the Securities and Futures Ordinance since 1 June 2011.

Citron Research of California has also been facing SFC action for misleading the markets with faulty analysis. The rating agency's founder allegedly shorted shares in Evergrande Real Estate Group Ltd in 2012 and wrote a damning report on it that caused a drop in its share price.

The Wall Street Journal quoted Andrew Left as saying: “Just like someone who owns the stock and writes why they believe the stock is undervalued, I might short a stock and say why I believe the stock is overvalued. At the end of the day, it is the market that decides the price of equity.”