The National Securities Market Commission (CNMV) reported yesterday that it is analyzing the additional information it requested from the pharmaceutical group Grifols on its accounting and relations with its main shareholders, and it said that it is also analyzing the activity of Gotham City Research, the vulture fund that accused him of manipulating the accounts and caused his stock market crash, to analyze whether it amounts to market abuse.
The CNMV explained yesterday in a statement that it has received the additional information that it had requested from the company, its shareholders and related entities, but advanced that “there is no evidence as of today, with the public information available, that the information published and audited by Grifols does not comply with the regulations”. However, he notes, it will still take weeks to analyze the additional information he has obtained before reaching a definitive conclusion. The management of Grifols has defended at all times that it did not commit irregularities and has announced legal actions against the hedge fund.
For this reason, the regulator explains that, “beyond the review of Grifols’ financial information, the CNMV is analyzing the conduct of Gotham in terms of the content of its report, the manner in which it was disseminated and the related market operations “. The fund bought back its short position in pharmaceuticals on the same day the report was published, taking advantage of the fall in the stock it had caused, to obtain a profit of more than 20 million euros.
The CNMV points out that its analysis aims to “determine whether the aforementioned conduct complies with European rules on market abuse, in particular those that address the dissemination of misleading information. This analysis will necessarily have to be nourished, he warns, from the conclusion of the review of the financial information of Grifols” which the institution received just yesterday. In addition, financial sources assured, the CNMV has requested additional information from Gotham and the General Industrial Partners (GIP) fund, through which it carries out its operations.
The Spanish stock market regulator also assured that it rules out banning short positions on the company (the possibility of selling shares without owning them, selling them on credit). Thus, he points out, “he has strictly monitored the positions on Grifols since the 9th” and in his opinion “they do not present high values ??and have not determined the fundamental evolution of the price of the value”, so that the legal conditions for justify the prohibition of this operation.
Other hedge funds, such as Millennium International Management, of the billionaire Israel Englander, the eighth richest financier in the world according to Forbes, announced a few days ago a bearish position in Grifols of 0.7% of its capital, which partially closed on Friday after the decision of the rating agency S
Doubts about the Spanish market and the impunity of these actions have also led to an increase in short positions in other highly indebted securities, such as Solaria (which has lost 22% on the stock market in recent weeks), Colonial (13.6 %), OHL (-12.6%) or Acciona Renovables (-12.33%).
The CNMV also shrugged off the criticism it has received for not suspending the stock after the report was published, which led to a fall that left many retail investors stranded. In his opinion, there is “no specific privileged information pending publication that would imply an asymmetric information situation between different investors”, so there was no need to suspend the negotiation as a precaution.
The CNMV explained that until now it has focused on clarifying “the information about the company available to shareholders and investors”. With the information it has received, the CNMV says that its analysis on whether the additional information provided by Grifols is correct “may take a few weeks, and it is not possible to determine a specific date for its conclusion”, nor anticipate in what sense it will be.
Although the regulator has so far not noticed any irregularities in the information provided by Grifols, and can ask them for additional clarifications, as it has done now, the CNMV recalls in its statement that “the post-supervision function does not replace or have the same scope as the duty of the administrators to reflect the true image in the financial information and the duty of the auditors to issue a professional opinion based on this circumstance”.
After the CNMV statement, Grifols shares closed the session with a rise of 1.97%, up to 8.99 euros, but they are still 37% below the level they had reached before the Gotham attack.
