A New York court found enough evidence to continue with the defamation lawsuit filed by Spanish pharmaceutical company Grifols against short seller Gotham City Research, Grifols said in a statement on Friday.
Based on its findings, the Federal District Court for the Southern District of New York rejected a request filed by Gotham City to dismiss the lawsuit, Grifols said.
In January 2024, Gotham, 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 shares in order to sell them, with the hope of buying them back more cheaply to make a profit.
According to Grifols, the court also found that Grifols adequately argued that Gotham City’s report contained false statements, such as that the company had failed to disclose a $95 million loan to Scranton Enterprises.
Gotham City did not immediately respond to a request for comment.
