Muddy Waters, Casino Let Off With a Warning by French Watchdog

(Bloomberg) -- Muddy Waters LLC and French retailer Casino Guichard Perrachon SA were both let off with a warning by the country’s markets regulator after a four-year investigation into a report by the American short seller that triggered a share-price slump.

The enforcement body of France’s Autorite des Marches Financiers decided that no formal complaint was needed and closed the case, the regulator said Tuesday in a statement. Still, AMF officials issued a warning letter to Casino and Muddy Waters.

Muddy Waters Capital was told by the regulator that its communications are considered investment recommendations, and reminded of “the importance of compliance with the principles of honesty, fairness and impartiality,” the AMF said.

The regulator warned Casino about the quality of its financial information between 2013 and 2018, particularly around transactions described as “property development.” Casino was reminded of its role in ensuring that investors have enough information to allow markets to function properly.

Representatives of Casino and Muddy Waters declined to immediately comment.

In late 2015, Muddy Waters, which was founded by Carson Block, published a report saying Casino’s main investor, Rallye SA, was overvalued, which sent shares of both firms tumbling. Muddy Waters is among a group of short sellers that have actively criticized Casino’s debt load and financial structure.

The AMF said it plans to propose new rules covering shareholder activism in the first quarter of 2020.

To contact the reporter on this story: Gaspard Sebag in Paris at gsebag@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser

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