Greek bank stocks, short selling and the HCMC

In May 2014 Eurobank, a Greek listed credit institution, performed a share capital increase by issuing new shares to investors in Greece and abroad, including anchor investors who acquired about 30% of its share capital. In the days leading up to the acceptance of the new stock for trading, there was heavy selling and a severe price drop of about 18%, which was deemed to be due to sales by institutional investors in anticipation of delivery of the new stock. This pattern of events unfolded also in the context of similar exercises at about the same time for the other three ‘systemic’ banks (the term meaning banks considered by regulators as sufficiently big and important to be supported, lesser institutions were mainly absorbed into those four).

In response to public outcry for the wild swings in the market, the Hellenic Capital Market Commission issued an announcement regarding the fall in price of Eurobank shares. The announcement highlighted a specific provision of the EU Regulation 827/2012 to support a view of a possible breach of the Regulation, based on the fact that the delivery of shares on a specific date was not legally binding on the issuer – but simply ‘expected’ under the Information Memorandum. The HCMC particularly stressed out ‘the need for complying with the applicable Pan-European short sales legal framework in relation to shares about to be listed (on the Athens Exchange) following a primary offer’ and it ended its announcement with the phrase ‘the Hellenic Capital Market Commission warns and assures that, under its powers laid down in the applicable law (L. 4141/2013), it will proceed in thorough investigation of the transactions related to the above and in the event violations are ascertained, it will impose those’.

A full investigation of all relevant trades indeed ensued, at the end of which in November of 2014, the HCMC started sending out letters to implicated sellers, in which it was alleged that there has been a breach of the EU Short Selling Regulation and sanctions were threatened. In all it is considered that the matter affects about 150 trades and a smaller, but still quite significant, number of funds and asset managers (some having been involved in several trades, involving, e.g., more than one banks, etc.).

The HCMC has even announced some decisions on this matter in December and again in the last week of February, in which fines have been imposed in amounts starting from E 10,000 and going up to E 400,000, depending on whether settlement occurred without problems or there was need for the buy-in procedure of the Athens Exchange to be activated. More decisions are expected in the next weeks and months.

Souriadakis Tsibris, the premier financial regulatory firm in Greece, is following closely this matter from all relevant aspects, as it is representing a large number of parties involved. If you need additional information on the current status of this affair or an analysis of the legal issues involved, please contact Michael Tsibris at or Giannis Koumettis at






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