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Muddy Waters hits back against accusation of deceit on report about Casino
MUDDY Waters LLC's co-founder Carson Block hit back at French investigators following accusations of deceit related to its 2015 report on retailer Casino Guichard-Perrachon SA that triggered a share-price slump.
Mr Block said the preliminary findings of watchdogs at the Autorite des Marches Financiers (AMF) "are tainted by bias" against his firm following a Thursday report from newspaper Le Monde on the accusations.
"We vehemently disagree with the preliminary conclusions of the investigation team," Muddy Waters' chief investment officer said. "Our research on Casino and Rallye has proven prescient and accurate, with any suggestion to the contrary lacking credibility."
Officials at the AMF highlighted a factual mistake concerning a three billion-euro (S$4.6 billion) guarantee mentioned in the report published Dec 17, 2015, that could make it wrong or deceitful, Le Monde said, citing unidentified sources.
Muddy Waters erroneously said the guarantee had been granted to Casino when, in fact, it was given to its Brazilian subsidiary known as GPA, investigators told Mr Block in an April 15 letter, according to the French paper.
The AMF investigators' confidential findings are preliminary at this stage and no decision has been taken about sending the case to the regulator's enforcement committee, which is the decision maker on any fines or bans.
Just as the December 2015 report was being published, Mr Block said in an interview that Casino's debt burden was dangerously high and criticised its "sharply deteriorating core business". In the report, Mr Block said the shares of Casino's main shareholder, Rallye SA, were worth close to zero. Casino sank 12 per cent in Paris trading and Rallye plunged 19 per cent that day. The AMF has been probing the matter for nearly four years.
According to Le Monde, AMF investigators complained that while the publications issued by Muddy Waters are akin to analysts' investment recommendations, the short seller didn't comply with certain principles of integrity, impartiality and precision. BLOOMBERG