MADRID (Reuters) -Spain’s High Court on Thursday summoned the founder of U.S.-based short seller Gotham City Research, Daniel Yu, to testify over allegations his company disseminated misleading information about pharma firm Grifols to influence its share price.
In January 2024, Gotham City, which had previously shorted Grifols shares, released a report accusing the company of overstating earnings and understating debt. Grifols denied the allegations but lost around a third of its market value following the report.
Shorting involves borrowing a stock to sell it in the expectation the price will fall, then buying it back at the lower price to pocket the difference.
Investigating judge Jose Luis Calama has also summoned General Industrial Partners (GIP) manager Cyrus de Weck, the court said in a statement.
GIP is a partnership between Gotham City Research and Portsea Asset Management, which was founded by de Weck.
Both Yu and de Weck have been summoned as investigated people in relation to potential market-related offences, the court said.
“We welcome the opportunity to provide all the necessary information and to bring clarity to this investigation,” a representative for both Gotham City and GIP told Reuters.
Gotham City said in May, in a separate case about its research on Grifols, that it remained confident in the integrity of its work and stood by it.
Yu is scheduled to appear on February 26, with proceedings potentially extending to February 27 if required. De Weck is set to testify on March 5, with an option to continue the following day.
(Reporting by Emma Pinedo. Additional reporting by Jesus Aguado. Editing by Mark Potter)
