UPDATE 1-Spain's Grifols sues Gotham City fund, JV over damaging report
(Adds background, Grifols also suing Cyrus de Weck)
MADRID, Jan 26 (Reuters) - Spanish pharmaceutical company Grifols said on Friday it filed a lawsuit in a U.S. court against the founder of short-seller fund Gotham City Research, Daniel Yu, and his company, seeking damages over a report suggesting accounting irregularities at Grifols.
The lawsuit, filed in U.S. District Court in Manhattan, also named as defendants Portsea founder Cyrus de Weck and General Industrial Partners, which is a joint venture between Yu and de Weck, and their affiliates.
Neither Gotham nor de Weck replied to a request for comment.
Grifols "is seeking injunctive and monetary relief through this lawsuit and intends to hold defendants fully accountable for their wrongful conduct alleged in the complaint," it said in a statement.
Since the Gotham report was published on Jan. 9, shares in Grifols have lost more than 30%, wiping more than 2.8 billion euros off the company's value.
Grifols has denied any wrongdoing.
Earlier this month, Grifols it would launch legal action against Gotham to seek compensation at least equivalent to the share price loss.
On Tuesday, the Spanish supervisor CNMV said it could take weeks to reach a conclusion on allegations made by Gotham against Grifols. It said it was also looking at whether Gotham had complied with European regulations on
market abuse
, "in particular those dealing with the distribution of misleading information."
Grifols board member Tomas Daga told Reuters that it was in Gotham's interest for the company's share price to fall because Gotham and partners at some point held short positions of more than 0.5%, meaning the fund stood to profit in the event of stock price declines.
Active short-sellers like Gotham, which bet on share price falls, can wipe huge sums off the market value of their targets.
(Reporting by Andrei Khalip and Jessica Jones; additional reporting by Jesús Aguado and Nell Mackenzie; Editing by Leslie Adler)
