​Spain to take action against short sales in Bankia

December 23, 2013 - 3:13:16 am

A view of Bankia’s headquarters building in Madrid.  

MADRID: Spain’s stock market regulator said it was ready to take action against a series of short sales in Bankia shares which took place when the bank hiked capital earlier this year to receive ¤18bn ($24.6bn) in European funds.

Hundreds of thousands of small shareholders lost their savings in the near collapse of Bankia and the Comision Nacional del Mercado de Valores (CNMV) watchdog has faced criticism for failing to protect them, including with the dealings that took place in May.

While short-selling was legal, sources had said at the time that some investors who were forced to swap their hybrid debt and preference shares at a discount in the capital hike may have tried to compensate their losses by engaging in naked short-selling, which is banned in Europe.

While a short sale involves borrowing shares to sell, naked short-selling involves dealers selling stock they don’t own in order to make a profit by hopefully buying it back at a lower price later.


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