The Capital Market Commission is investigating 150 stock transactions that took place last spring and are suspected of having broken regulations on naked short selling as foreign investors are believed to have sold bank stocks they did not in fact own in an aim to devalue them. Huge fines are expected to be handed out early next year.
“We are examining 150 instances of transactions in shares of the four systemic banks that were completed immediately after their share capital increases in April and May 2014,” the commission’s head, Constantinos Botopoulos, revealed on Tuesday.
“All cases concern transactions by foreign institutional investors who made suspicious transaction in the shares of the four banks, as the investigation shows that they sold stocks they did not possess,” added Botopoulos.
The probe into profiteering through devaluation has been going on for some months now and the first fines are expected to be imposed in January 2015. Botopoulos explained that “violators will be punished with mammoth fines of up to 50 million euros. The investigation into the shares of one of the four systemic banks has already been completed.”
The probe into stock manipulation through naked short selling concerns the days just before the listing of the new shares stemming from the lenders’ share capital increases, following huge losses and high trading volumes in the market with the use of the T+3 rule (Transaction day plus three days) that applied at the time.
For instance, in National Bank’s case, four days before the introduction of its new stock 16,635,648 shares were traded, resulting a 3.2 percent decline. The following day the volume soared to 82,122,701 shares, with a 10.74 percent decline.
In the case of Eurobank, its stock started the year at a price of 0.553 euros. One day before the announcement of the share capital increase (on April 3), it was at 0.458 euros with 1,977,237 shares changing hands. Four days before the listing of the new stock on May 2 the price stood at 0.483 euros, but the average daily volume in the month from April 3 to May 2 had soared to 18,454,113 shares. One day after the new stock was listed (May 7) its picture changed: The price fell to 0.384 euros, shedding 20.5 percent from May 2 with average volume at 100,515,812 shares per day.