Grifols sued Gotham City Research before the Southern District Court of New York in the United States because of its report “that contained lies about the accounting, communications, finances, and integrity” of the group.
In a communication with the CNMV, the stock market supervisor, the multinational explained that the complaint stated that this fund, in addition to the “publication and distribution” of the aforementioned report, obtained “a substantial short position in Grifols.”
The case is directed, in particular, against Gotham City Research, its directors, Daniel Yu and Cyrus de Weck, and against General Industrial Partners LLP, another vehicle through which it operates. Gotham continued in its report, published on January 9, that “Grifols manipulated the reported debt and the Ebitda to artificially reduce the leverage to six times, when it could exceed ten or thirteen times,” where it rules that its actions are “worth zero.”. It also focuses on complex multinational relationships with Scranton Enterprises, which also owns multinational service centers. Accusations that have caused Grifols to lose a third of the value of the stock market since then and until now.
The group, which is listed on the Spanish Stock Exchange and the American Nasdaq, has defended the authenticity of its accounts from the beginning. A day after the publication of the report, the listed company announced that it would take legal action “due to the significant damage caused, both financial and reputational.” In the communication of the complaint, Grifols reported that it “requests the use of precautionary measures so that the defendants withdraw and do not continue their actions, while at the same time requesting financial compensation.” “It is also requested that the defendants be held fully accountable for the misconduct alleged in the lawsuit,” the multinational blood products company added.
This week, the CNMV received the information it requested from Grifols following the Gotham City Research report and has begun analyzing it, a process that could take “several weeks,” according to the stock supervisor’s report. The CNMV also examined Gotham’s conduct, particularly the content of the report, the manner in which it was disseminated, and the relevant market operations, for any misleading information.
The supervisor, who has not yet found any violation of the regulations by Grifols, intends to “clarify the situation as soon as possible” and make public the conclusions reached.
Gotham City, which specializes in short-selling operations that generate profits with falling share values, became known in Spain in 2014, when it put Wi-Fi provider company Gowex on the ropes after criticism that 90% of his income is not real and that the value of the company is zero.
In short, an investor borrows shares from another and then sells them, and he makes an agreement when the price goes down because he needs to buy the same number of shares again. It is again the investor who lends them.