CNMV demands more information from Gotham about Grifols’ report and his bearish bet against the company
The National Securities Market Commission (CNMV) analyzes the results of the Gotham City study. regarding the contents of the report in which he accuses Grifols of manipulating his accounts, the manner in which it was distributed and the related market transactions. For this purpose, the Spanish market regulator requested additional information to a bear bottom.
This was reported by CNMV sources in an interview with EL ESPAÑOL-Invertia. As the organization chaired by Rodrigo Buenaventura announced on Tuesday, its “goal is to determine whether the conduct in question complies with European standards regarding market abuse, especially related to the dissemination of misleading information“.
It’s worth recalling that on January 9, before the stock market opened, Gotham City Research published a report finding that Grifols is a “highly leveraged” company and that it is “manipulating its reported debt” to “artificially lower” its use. “.
(CNMV is already analyzing the documentation provided by Grifols and studying the behavior of Gotham City)
“If we are right, then Grifols’ capital is zero“, their analysts emphasized. The bear bottom particularly pointed to the pharmaceutical company’s relationship with Scranton Enterprise -its second largest shareholder- and also consolidation of Haema and BPC in his accounts, despite the fact that he is not the owner of any of these companies.
Grifols, for its part, defended itself against the charges both with the help of facts relevant to the CNMV and through a conference with analysts and investors. At this meeting, its CEO Thomas Glazmann criticized “speculative nature” of Gotham City research. He accused the company of acting for its own benefit.
Thus he referred to short Gotham City Research on Grifols. The fund, equivalent to 0.57% of the capital of the blood products company, reported this to the CNMV on January 8, that is, the day before it made its accusations.
After Grifols shares fell 25.9% in just one session, the firm trimmed its short position to 0.06%. It closed it on January 11, taking advantage of a new downturn for the pharmaceutical company, which lost 16.17% of its value.
(International foundations consider it likely that the Grifols family will lose control of the group)
Gotham City Research’s work has raised some suspicions despite the fact that “there are often funds with strategies related to the supposed discovery of weaknesses in listed companies,” as Buenaventura highlighted a few days ago.
Now the CNMV has announced that “closely monitors” short positions on Grifols. “In aggregate terms and compared to the group of Spanish listed companies, they do not represent a high value and do not determine the fundamental evolution of the price of the securities,” he explains in a document published on Tuesday.
The request for information that CNMV sent to Gotham City Research is in addition to the request sent to the company itself, as well as the Scranton Enterprise. As noted Bloombergthe regulator requested “details of shareholders, accounts and business.”
Minority shareholders felt that the CNMV should provide “transparency” about information related to Scranton, given that the document sent by the watchdog on Tuesday “made no reference to it,” according to sources from the Spanish Association of Minority Shareholders. from listed companies (Aemec) to Europe Press.
conclusions
“The CNMV is committed to clarifying the situation as soon as possible and that the findings of their actions be made public“, the regulator defended.
Although he will publish the findings of his study, will not disclose information sent to Grifols as it is sensitive to the pharmaceutical industry. In fact, the regulator never distributes responses to its requirements.
(ISS-EVA, the only analyst who recommends a sell on Grifols shares)
Anyway, “It will take weeks to analyze everything.”, sources from the manager repeat. The rules benefit the investigation as they do not set any time frame within which the CNMV must make a decision.
The time “will depend on the volume” of data analyzed and whether the regulator is satisfied with the information it already has. or if you ask Grifols for any clarification or addition to what has already been provided.
CNMV does not wish to make any assessments. At worst If the institution initiates a case for sanctions against Grifolsthe company may face economic punishment.
The amount will depend on the violation committed. The casuistry covered by both Spanish and European rules is very wide, and the penalties imposed vary greatly depending on whether the offense committed is minor, serious or very serious. The regulator is currently studying whether Grifols committed any punishable acts.
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