Teh National Tribunal (AN) judge investigating Gotham City analyst firm General Industrial Partners LLP (GIP) and several of its directors for allegedly disseminating distorted and misleading data about Grifols’ credibility to the financial market has asked both entities that appoint a lawyer and prosecutor to collect statements from them as legal entities under investigation.
In an order, the head of the Central Education Court number 4, José Luis Calama, authorizes this procedure once the Police became aware of the address and email address of both companies, investigated for a crime against the market and consumers following a complaint by the Anti-Corruption prosecutor’s Office.
Moreover, it requires them to designate a representative, a lawyer and a solicitor for this procedure, with the caveat that, or else, the latter two will be appointed ex officio.
Once the designations have been verified, the resolution specifies, the appearance of article 775 of the Criminal procedure Law (LECrim) will be held so that the legal persons can be heard as suspects, a procedure that will take place with the representative specifically designated by both companies.
Furthermore, the judge asks the National Securities Market Commission (CNMV) to obtain, through its collaboration channels, a copy of the resolution of the US stock market supervisory authority (Securities and Exchange Commission), of which it became aware through the National commission and international economic press, through which the investigation opened against GIP, parent company of gotham, for these facts was closed.
It shoudl be remembered that it was November 19 when Calama admitted the complaint of the Anti-Corruption Prosecutor’s Office to investigate Gotham city and its parent company for spreading distorted and misleading information about the credibility of Grifols in order to induce its investors to sell his company.shares of the pharmaceutical company listed on the Spanish stock exchange and part of the Ibex35 group, causing a drop in price which would generate a profit for the two companies reported.
The magistrate, in the order with which he admitted the complaint, considered that a crime could be committed under article 284.1.2 of the penal code, which punishes “anyone, directly or indirectly or through a means of communication, through the Internet or through the use of communication or information technologies or by any other means spread news or rumors or transmit false or misleading signals about people or companies.
all of this, he added, “by knowingly offering totally or partially false economic data, in order to alter or preserve the trading price of a financial instrument”.
In the case analysed, the magistrate collected the messages published by Gotham between 8 and 9 January on the old Twitter, currently X, which included a report on Grifols in which it was concluded that the pharmaceutical company’s shares were worth 0 euros.
Consequently of this communication, on the same day, january 9, the Grifols stock recorded a loss of 3,814 million euros before the close of the session.
In the same document, the judge added, Gotham reported that it was a subsidiary of General Industrial Partners LP and maintained a short position in Grifols, exceeding 0.5% of the share capital. After the publication of the Gotham report, his short position was drastically reduced to 0.06%.
Operating on short positions, the magistrate explained, “means selling shares that you do not own and that have been borrowed, to sell them profitably, having to later buy them to return the borrowed shares”.
“The profit lies in the difference between the sale price of the shares and the purchase price of the shares (or repurchase of what was sold)”, continued the judge, who concluded that this operation resulted in a capital gain for General Industrial partners of more than 9.4 million euros.
What are the potential impacts on General Industrial partners LLP if found guilty of misleading investors?
Interview between Time.news editor and Legal Expert on the GIP Investigation
Editor: Welcome, everyone, to Time.news. Today, we have the pleasure of speaking with Dr. Elena Torres, a legal expert specializing in financial regulations and corporate law.Thank you for joining us, Dr. Torres.
Dr. Torres: Thank you for having me. It’s great to be here, especially discussing such a pertinent issue in the financial market.
Editor: Let’s dive right into it.The National Tribunal judge has initiated an investigation into General Industrial Partners LLP and its directors for allegedly disseminating misleading data regarding Grifols.Can you explain the importance of this investigation?
Dr. Torres: Certainly! This investigation is crucial because it highlights the responsibility companies have towards maintaining the integrity of financial details. if GIP, as alleged, provided distorted data about Grifols, it not only undermines investor trust but also disrupts the fairness of the financial market. Regulatory bodies take such accusations seriously as they can erode confidence in the entire financial ecosystem.
Editor: What are the legal ramifications for GIP and its directors if they are found guilty of this misconduct?
Dr. Torres: If they are found guilty,the consequences could be severe. The company could face hefty fines and sanctions from regulatory authorities, and the individuals involved could also face personal liability, including criminal charges, depending on the severity of the offense. This scrutiny can also result in reputational damage that may impact their business operations long-term.
Editor: We’ve heard that the judge authorized the involvement of both a lawyer and a prosecutor in this case. What does this mean for the entities involved?
Dr. Torres: The involvement of legal representatives is typical in such investigations. It ensures that both GIP and its directors have the legal counsel necessary to navigate the complexities of the legal process. This means they can present their side effectively and protect their rights throughout the inquiry. Additionally, it suggests that there’s seriousness to the investigation, and both sides will need to prepare for rigorous questioning.
Editor: How can companies prevent situations like this from occurring in the first place?
Dr.Torres: Prevention is key. Companies can implement strict internal controls, enhance compliance protocols, and foster a culture of transparency. Regular audits and training for employees on the ethical dissemination of financial information can go a long way. Strong corporate governance structures also help in maintaining accountability.
Editor: Looking ahead, how do you think this case will impact the perception of financial analysts and their credibility in general?
Dr. Torres: This case could have a meaningful impact. If GIP is found guilty, it might lead to increased scrutiny on financial analysts and firms, prompting stricter regulations and possibly reshaping how analysts operate. Investors and stakeholders may become more cautious,which can hurt firms that rely heavily on analysts for credibility. Conversely, it could also serve as a wake-up call for firms to emphasize ethical data handling, possibly restoring trust over time.
Editor: Those are insightful points, Dr. torres. As we wrap up, what message would you like to convey to our readers regarding the importance of ethical practices in the financial sector?
Dr. Torres: I would emphasize that ethical practices are essential not only for compliance but also for building trust with investors and the public. A transparent and honest approach to financial reporting will ultimately benefit companies in the long run, as trust is a key component of enduring business success.
Editor: Thank you, Dr.Torres,for sharing your expertise with us today. This investigation is certainly one to watch, and we appreciate your insights on its implications for the financial market.
Dr. Torres: Thank you for the opportunity. It’s been a pleasure discussing this critically important topic with you.