LONDON – Grenke, a German financial services company, is under investigation after a short seller research firm reportedly alleged market manipulation, money laundering and fraud.
The 64-page report, which Grenke strongly opposes, was published by Fraser Perring of Viceroy Research. The shares of Grenke, listed on the Frankfurt Stock Exchange, fell 29% at one point on Tuesday and fell sharply again on Wednesday.
Grenke argues that one of the main allegations in the report is wrong.
"A central accusation is that a significant part of the cash and cash equivalents reported in the 2020 half-year report in the amount of 1,078 million euros is not available," said Grenke in a statement. "That is demonstrably wrong."
The company announced that on June 30, EUR 849 million was held in the accounts of the Deutsche Bundesbank. "To date, the balance at the Bundesbank is 761 million euros," said Grenke. A spokesman for the German central bank declined to comment when contacted by CNBC.
Grenke said it is currently preparing a detailed response to the allegations and reserves the right to take legal action.
The German financial supervisory authority BaFin told CNBC that it was examining the allegations of market abuse. The regulator said its investigation will examine whether Grenke attempted to manipulate the markets, for example by providing false information on the financial statements.
It also checks to see if there has been any potential market manipulation by third parties who may have launched a brief attack.
BaFin said it was also looking into possible insider trading at Grenke before Viceroy's report went online.
Grenke was founded in 1978 by Wolfgang Grenke and employs 1,700 people at 32 locations worldwide. The company, headquartered in the spa town of Baden-Baden in the southwestern German Black Forest, mainly offers banking services for small and medium-sized companies.
In 2016, Viceroy Research triggered the alarm for the German electronic transfer company Wirecard with the now famous "Zatarra Report".
Viceroy Research was founded in 2016 and was made public in 2017 after it released a report of accounting irregularities at South African retail giant Steinhoff that caused its stocks to collapse.
In November 2018, the governor of the Central Bank of South Africa claimed Viceroy Research had benefited "unethically" from its reports, according to Bloomberg. The company's "About" section on its website doesn't reveal much and describes the company as "a group of people who see the world differently".