Why Casino is under investigation for price manipulation and insider trading


A Casino supermarket in Tassin-la-Demi-Lune, in the Rhône, in April 2023 (AFP/Archives/JEFF PACHOUD)

The alleged stock market manipulation, which earned Casino CEO Jean-Charles Naouri a day in police custody on Thursday, dates back to 2018 and 2019, when the distributor’s action was heckled amid questions about his indebtedness, which eventually caught up with the group.

What is blamed on Casino?

The CEO of the group with multiple supermarket brands (Casino, Monoprix, Franprix) was taken into custody on Thursday as part of an investigation opened on February 5, 2020. He was released without charge against him at this stage.

In March, the National Financial Prosecutor’s Office (PNF) indicated that this investigation related to alleged facts of “price manipulation in an organized gang, active and passive private corruption” and “insider trading committed during 2018 and 2019”, and made following a report from the Financial Markets Authority (AMF), the policeman of the Paris Stock Exchange.

The CEO of the Casino group, Jean-Charles Naouri, on February 21, 2013 in Paris

The CEO of the Casino group, Jean-Charles Naouri, on February 21, 2013 in Paris (AFP/Archives/Eric PIERMONT)

According to sources familiar with the matter, Mr. Naouri had already been placed in police custody in this investigation at the end of 2022 and in May 2022, AMF investigators had visited the group’s headquarters as well as the boss’s home.

In its recent financial documentation, Casino indicates that this investigation “derives from an action brought against a former consultant of the group” and specifies that it “formally disputes these allegations”.

According to two sources familiar with the matter, this investigation concerns the links of Mr. Naouri and the Casino group with the press boss Nicolas Miguet.

What role would Nicolas Miguet have played?

This businessman, also known for his political career, has been condemned several times by the AMF, in particular for acts of price manipulation.

According to several media, investigators suspect possible collusion between Casino and Mr. Miguet, who could have been paid by the distributor to defend its stock price in its various publications.

In May 2022, AMF investigators visited the group's headquarters as well as the home of its CEO, Jean-Charles Naouri

In May 2022, AMF investigators visited the group’s headquarters as well as the home of its CEO, Jean-Charles Naouri (AFP/Archives/ERIC PIERMONT)

To the daily Le Monde on Friday, Nicolas Miguet indicated that he had been paid by Casino as part of an advisory mission carried out between October 2018 and April 2019 aimed at helping the issuer to develop its individual shareholding.

“We worked a lot, but none of my proposals were accepted,” he told Le Monde.

What period is it?

This 2018-2019 period is not insignificant in Casino’s turbulent stock market history. From December 2015, financial players known as short sellers – who earn money by betting on the fall in a stock market price they deem overvalued – regularly target Casino shares.

It was the American Muddy Waters who first sounded the alarm on Casino’s indebtedness.

Casino and Rallye, the holding company through which Jean-Charles Naouri controls the distributor, then castigate “disinformation campaigns with a view to artificially lowering the value of their securities”.

The group filed complaints at the end of 2018 for slanderous denunciation. The investigations that followed are “still ongoing to the knowledge of the company”.

Contacted Friday by AFP, Sophie Vermeille, lawyer for Muddy Waters, regrets the length of these procedures when a quick settlement would have been in her eyes “beneficial to avoid the financial deterioration of Casino”.

These stock market turbulences at the time weakened Rallye and the pyramid of holdings of Jean-Charles Naouri, to the point of leading to a placement under safeguard procedure in May 2019.

Since May 2019, Casino’s stock price has lost more than 80% of its value.

What is the situation since?

In December 2019, the AMF sent two observation letters to Casino and Muddy Waters.

She simply clarified that the letter addressed to the first concerned “the quality of its financial information” between 2013 and 2018, while she reminded the second of the obligations imposed on actors “issuing investment recommendations”.

The Rallye backup plan leaves Jean-Charles Naouri in charge of Casino, but imposes major asset disposals and large debt repayment deadlines.

These are postponed by two years, to 2025, on the occasion of the Covid-19 epidemic, but the situation appears untenable.

Casino ended up asking at the end of May to enter into a procedure to renegotiate its debt, valued at 6.4 billion euros, and in parallel, candidates for the takeover of the distributor have come forward.

© 2023 AFP

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