Spain's Grifols sues Gotham City fund, JV over damaging report (updated)

General Plastic Industrial

26/01/2024 19:49

(Adds background, Grifols also suing Cyrus de Weck)
       MADRID, Jan 26 (Reuters) - Spanish pharmaceutical
company Grifols  GRLS.MC  said on Friday it filed a lawsuit in a
U.S. court against the founder of short-seller fund Gotham City
Research, Daniel Yu, and his company, seeking damages over a
report suggesting accounting irregularities at Grifols.
    The lawsuit, filed in U.S. District Court in Manhattan, also
named as defendants Portsea founder Cyrus de Weck and General
Industrial Partners, which is a joint venture between Yu and de
Weck, and their affiliates. 
    Neither Gotham nor de Weck replied to a request for comment.
        Grifols "is seeking injunctive and monetary relief
through this lawsuit and intends to hold defendants fully
accountable for their wrongful conduct alleged in the
complaint," it said in a statement.
        Since the Gotham report was published on Jan. 9, shares
in Grifols have lost more than 30%, wiping more than 2.8 billion
euros off the company's value.
  
        Grifols has denied any wrongdoing.
  
    Earlier this month, Grifols it would launch legal action
against Gotham to seek compensation at least equivalent to the
share price loss.
        On Tuesday, the Spanish supervisor CNMV said it could
take weeks to reach a conclusion on allegations made by Gotham 
against Grifols. It said it was also looking at whether Gotham
had complied with European regulations on 
    market abuse
    , "in particular those dealing with the distribution of
misleading information."
  
        Grifols board member Tomas Daga told Reuters that it was
in Gotham's interest for the company's share price to fall
because Gotham and partners at some point held short positions
of more than 0.5%, meaning the fund stood to profit in the event
of stock price declines.
  
        Active short-sellers like Gotham, which bet on share
price falls, can wipe huge sums off the market value of their
targets.
  
            
  

 (Reporting by Andrei Khalip and Jessica Jones; additional
reporting by Jesús Aguado and Nell Mackenzie; Editing by Leslie
Adler)
 ((andrei.khalip@thomsonreuters.com; (351) 213-509-209;))