Findings on Grifols’ accounts could take weeks, Spanish supervisor says

By Jesús Aguado

MADRID (Reuters) -Spain’s stock market supervisor CNMV said on Tuesday it could take weeks to reach a conclusion on allegations made by short-seller Gotham City against drugmaker Grifols and that it was also looking at whether Gotham had complied with European regulations on market abuse.

A report by Gotham City two weeks ago questioned Grifols’ financial accounts, claiming the drugmaker fiddled its reported debt and earnings before interest, taxes, depreciation and amortisation (EBITDA), to under-report its leverage ratio.

Grifols has denied allegations it had manipulated its debt and earnings through transactions with a related entity, and said it stood by its published leverage ratio.

Grifols declined to comment on Tuesday, while Gotham City did not immediately respond to a request for comment.

Since Gotham’s report was published on Jan. 9, shares in Grifols have lost almost 39%, wiping off more than 3 billion euros of the company’s value. On Tuesday, shares in Grifols were up 3.4% at 1339 GMT.

“It is not possible to anticipate any conclusions at this stage, nor is there any evidence to date, with the information available, that Grifols’ published and audited information does not comply with the regulations,” the supervisor said, adding that it may require additional information given its complexity.

The supervisor said it can review specific aspects of an issuer’s accounts retrospectively but said it was the duty of directors to give an accurate and fair view of financial information and that it was the duty of auditors to issue a professional opinion.


CNMV is also looking into Gotham City’s conduct to see if the short-seller complied with European Union regulation “in particular those dealing with the distribution of misleading information.”

Earlier this month, Grifols’ board member Tomas Daga told Reuters it was in Gotham’s interest for the company’s share price to fall since it and partners at some point held short positions of more than 0.5%, meaning the fund stood to profit in the event of stock declines.

Active short-sellers like Gotham, which bet on share price falls, can wipe huge sums off the market value of their targets.

The CNMV said it had been closely monitoring short positions in Grifols since Jan. 9 and said these positions were not the main driver of the share price.

(Reporting by Jesus Aguado, editing by Inti Landauro, Charlie Devereux and Susan Fenton)