The bearish fund Gotham City Research has asked a US court the case file with the pharmaceutical company Grifols For which he has alleged that his report of January 9 – in which the Catalan company was accused of distorting its accounts – falls within freedom of expression and that, in addition, several of its points were recognized as “substantially true.” » by the National Securities Market Commission (CNMV).
The documents refer to the hearing held between the parties on December 9 in the Southern District Court of New York; all of this following the reports spread by Gotham in which questioned the accounting and solvency of the Catalan company.
Thus, Gotham’s defense – in addition to that of its director and founder, Daniel Yu, together with General Industrial Partners (GIP) and Cyrus de Weck -, led by lawyer David S. Korzenik, has stressed that the statements “allegedly “defamatory” in Gotham’s report from January 9, 2024 and the following are “opinions protected and not actionable”in accordance with United States legislation on freedom of expression.
Furthermore, it has focused on the fact that the statements are “substantially true” in light of the report published by the CNMV on March 21 and in which “deficiencies” were identified in the company’s accounts.
In that line of argument, Gotham has defended its position as true based on the subsequent requirements and corrections that the Spanish stock market supervisor demanded from Grifols and for which the company had to reformulate its accounts.
The defense has also relied on the fact that Gotham’s performance does not fall within the framework of ‘actual malice’ required by United States law “in connection with each of the allegedly false statements.”
Gotham has in turn expressed that the lawsuits made by Grifols against the analysis firm for illicit enrichment are based on the same “flawed accusations of defamation”, so they must also fail.
According to Gotham’s defense argument, Grifols’ lawsuit fails to allege its premises “plausibly”.
Grifols lawsuit
The blood products company alleged in the complaint that the defendants obtained “a considerable short position” in Grifols by publishing and subsequently distributing a report “with falsehoods about the accounting, communications, finances and integrity” of the Spanish company, as reported to the National Securities Market Commission (CNMV).
Furthermore, Grifols requested in this lawsuit the application of precautionary measures so that the defendants would recant and not persist in their actions, at the same time that they requested financial compensation that they have not quantified.
He also required before the New York court that Gotham City Research; the director and founder of the bearish fund, Daniel Yu; General Industrial Partners; Cyrus de Weck and its investees are considered “fully responsible” for “illicit behavior” alleged in the lawsuit.
The company took this legal action the same week in which the CNMV began to analyze the information sent by Grifols itself on various aspects of its accounting, among them, the links of the Catalan company with the Scranton ‘family office’.
CNMV and Grifols
Recently, the president of the CNMV, Rodrigo Buenaventura, defended the actions of the institution in the case of Gotham and Grifols after its counterpart in the United States, the SEC, has decided to archive its investigation.
«In Spain we have a specific market abuse regime, very different from the American», indicated Buenaventura this Thursday during his speech at an event organized by the supervisor of financial markets.
Last September, the CNMV decided to open sanctioning files against Gotham and GIP for market manipulation in Grifols shares and for failing to comply with the provisions of the Market Abuse Regulation regarding investment recommendations.
Additionally, the supervisory body transferred to the Prosecutor’s Office all the information regarding the possible “manipulative” behavior by Gotham and GIP in case criminal actions arise for possible non-compliance with article 284 of the Penal Code.
At the beginning of December it was learned that the SEC (the United States stock market supervisor) has decided shelve the investigation against Gotham and without recommending any disciplinary action.
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