MADRID, Nov 20 — A Spanish court yesterday said it was investigating the US hedge fund Gotham City for allegedly publishing "misleading” information about Spanish pharmaceutical firm Grifols, causing its shares to plunge.

Gotham City released a research note in January accusing the Barcelona-based company, which makes blood plasma-based medicines, of "manipulating” its reported debt and operational results to "artificially reduce” its debt ratio, and therefore its financing costs.

Grifols lost around a quarter of its value on the day the report was published and has struggled since on the stock market. It has repeatedly denied Gotham City’s claims.

The US firm is a prominent "short-seller” hedge fund that borrows stock in a company and sells it in hopes of later buying it back cheaper to return it to the lender, and pocket the difference.

Spain’s top criminal court said it had opened a probe into the possible violation of market and consumer protection laws by Gotham City for allegedly distributing "biased and misleading” information about Grifols to encourage investors to sell their shares.

Gotham City earned over €9.4 million (RM44.4 million) from the sale of shares in Grifols following the publication of its research note that was based on "totally or partially false economic data”, the judge in charge of the probe said in a court document seen by AFP.

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The hedge fund has attacked several large companies in recent years and its accusations have contributed to a bankruptcy filing.

In 2014, Spanish Wi-Fi provider Gowex went out of business a few months after a damning report into its accounts from Gotham City.

Grifols has made sweeping management changes since the publication of the research note, including a new chief executive officer and a new chief financial officer.

The Grifols family, which owns about a third of the company, and Canadian investment fund Brookfield, have since July been in talks to take the company private.

Shortly after the court announced its probe, Brookfield made a €6.45billion bid for Grifols, offering a tentative non-binding price of €10.5 per share.

Grifols swiftly rejected the bid, saying it "significantly underestimated the fundamental prospects and long-term potential” of the company in a statement sent to Spanish stock market regulator CNMV.

Grifols shares were last trading at 10.40 euros, down 4.6 percent on day in a generally lower market.

The company traces its history back to 1909, first as a blood analysis and transfusion laboratory before specialising in products derived from blood plasma.

It is present in more than 30 countries including Australia, the United States and Japan. It posted revenue of €6.6 billion in 2023, a 10.9 percent increase over the previous year. — AFP