The blood product manufacturer Grifols announced this morning to the CNMV that it is going to take legal action against Gotham City Research, the vulture fund that caused its stock market crash on Tuesday, accusing it of falsifying its accounts.
In a communication to the regulator, the third since the American firm published its report, Grifols announces that “the company will take legal action against Gotham City Research for the significant damage caused, both financial and reputational, to the company, as well as to all its stakeholders and for causing great concern to their patients and donors.”
The shares of the blood products manufacturer fell up to 50% yesterday on the stock market after the bearish hedge fund published its report accusing the Catalan company of hiding its real debt and distorting its accounts, which led it to give it a value zero to their actions.
Grifols shares are experiencing another session of volatility this Wednesday after yesterday’s dark day: they started with a rise of 5%, at mid-morning they fell 4% and in the mid-session they rose up to 8%.
The company already announced to the staff on Tuesday, in an internal statement, its willingness to take action against Gotham. “Rest assured that we will do whatever is necessary to protect Grifols’ reputation and ensure that the reality of the facts prevails.”
The firm, led by Swiss-American director Thomas Glanzmann, also has few options to avoid a long legal battle.
Just yesterday, after the report was released, several US law firms specializing in class actions already published advertisements asking retail investors who could be harmed by bad practices in the company’s management to contact them to file class actions.
Thus, Holzer
Gotham has been accused on other occasions by victims of its reporting, and was convicted in 2015 of libel for accusations leveled against the British firm Quindell. Criteo, a French company that was also a victim of its attacks, sued it, in this case without achieving a conviction, but the American fund stopped publishing information about the company and after two years it even recommended buying its shares, at a price 10 times higher. which he had established in his first report.
In general, judges are little inclined to condemn these practices, which are often framed in the right to freedom of expression. Affected companies have also often asked regulators to act on a stock they consider to be stock market manipulation: the fund issues its report after short-selling the stock, to profit from its fall. In the United States, where these practices are more frequent, the SEC, however, does not act unless it is proven that there was an attempt at fraud in the publication of the report.
Grifols already indicated to the CNMV on Tuesday that it “did not understand” the interpretation that the Gotham report made of its financial statements, supported by the audits, “unless the only thing it intends, as a short-term fund that it is, is to lower the share price as they themselves reflect on page 2 of their report, to obtain profits.” In total, the report yesterday swept 2.2 billion from the company’s stock market value and generated a profit of more than 25 million euros for its author, at the lowest levels of the day.
