Gotham, Grifols Eye Two Separate Regulator Reports Ahead of Legal Standoff

As Grifols and Gotham City Research prepare for their legal showdown, both parties are eagerly awaiting the release of two separate reports from Spain's securities regulator, the Comisión Nacional del Mercado de Valores (CNMV). These reports could significantly impact the ongoing dispute between the drugmaker and the US short seller.

Gotham City Research, founded by Daniel Yu in 2012, gained notoriety in Spain for its critical analysis of Let's Gowex SA, a WiFi provider that had falsified its accounts. In January 2024, Gotham published a report accusing Grifols of wrongful accounting practices, leading to a significant drop in Grifols' stock price. Grifols, in turn, filed a lawsuit against Gotham and its affiliates, seeking redress for the financial and reputational damages caused by the report.

The CNMV's findings could have far-reaching implications for both parties. The watchdog has concluded that Gotham City's attacks on Grifols could be considered a form of market manipulation. However, it has also acknowledged that Gotham was right about some accounting deficiencies at the pharma company. These draft reports, seen by Bloomberg, come as a Spanish court weighs whether Gotham released biased and deceptive information about Grifols to induce investors to sell its shares.



The CNMV's findings on market manipulation by Gotham City Research could significantly impact investor sentiment towards short selling strategies. The watchdog's conclusion that Gotham City's attacks on Grifols could be considered a form of market manipulation may deter investors from engaging in similar activities. This could lead to a decrease in the number of short sellers targeting companies, as investors may become more cautious about the potential legal and reputational risks associated with such strategies. Additionally, the CNMV's findings could lead to increased scrutiny and regulation of short selling activities, further discouraging investors from engaging in these practices.

The CNMV's acknowledgment of accounting deficiencies at Grifols has significant potential implications for the company's stock price and investor confidence. If the CNMV's reports confirm these accounting issues, investors may lose confidence in the company's financial reporting, leading to a potential sell-off and further stock price decline. This could erode investor confidence in Grifols, making it more difficult for the company to raise capital in the future. The CNMV's findings may also intensify regulatory scrutiny over Grifols, potentially leading to disciplinary proceedings or legal action against the company.



The Spanish court's decision on Gotham's alleged biased and deceptive information could significantly influence the ongoing legal battle between Grifols and Gotham City Research. If the court finds that Gotham released biased and deceptive information about Grifols to induce investors to sell its shares, it could strengthen Grifols' case against Gotham. Conversely, if the court finds that Gotham's information was not biased or deceptive, it could weaken Grifols' case and potentially lead to a more favorable outcome for Gotham. Additionally, the court's decision could set a precedent for future cases involving short sellers and their reports on public companies, potentially influencing how these cases are handled in the future.

In conclusion, the CNMV's findings and the Spanish court's decision could have significant implications for both Grifols and Gotham City Research. As the two parties prepare for their legal standoff, investors and market participants will be closely watching the developments in this high-stakes dispute. The outcome of these regulatory and legal proceedings could shape the future of short selling strategies and investor confidence in the pharmaceutical industry.