MADRID – The outgoing head of Spain’s stock market regulator CNMV, Rodrigo Buenaventura, told reporters on Thursday that there were signs of possible market manipulation in the dispute between short seller Gotham City Research and pharma company Grifols (NASDAQ: GRFS).
In early January, the U.S.-based Gotham, which had previously shorted Grifols shares, released a report accusing the company of overstating earnings and understating debt. Grifols, which denied the allegations, lost a third of its market value following the report.
“We’re convinced that there are indications of conduct that requires action and therefore the Gotham case has been referred to the prosecutor’s office,” Buenaventura said.
Last month, an investigating magistrate at Spain’s High Court opened a probe into Gotham’s actions over the possible violation of market and consumer protection laws via “dissemination of news or rumors … that could contain totally or partly false” information.
The CNMV has earlier opened disciplinary proceedings against the fund for alleged market manipulation of Grifols (NASDAQ: GRFS) shares and the pharmaceutical group for faulty financial reporting.
Short selling involves borrowing shares to sell them, with the aim of buying them back at a lower price to make a profit.
On November 27, Brookfield (NYSE: BN), the Canadian fund, dropped its plan to take over Grifols in a deal that valued the developer of human plasma-based drugs at 6.45 billion euros ($6.79 billion) due to a disagreement over its value.
