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Societe Generla is taking legal action against UK publication the Mail on Sunday over its botched up report on European exposure to Greek debt, according to Reuters.The internal memo (via Reuters) said:
“Legal action against the Daily Mail is pending and similarly legal action will be taken against anybody who spreads unfounded rumours about our company.”
French publication Le Monde had published a fictional series called the End of the Line for the Euro, which was allegedly re-reported as factual by The Mail on Sunday. After rumours of SocGen’s exposure gained traction, shares slumped over 20% in one day.
At the time, The Mail printed a retraction which caused the sell-off to ease for a bit before shares began falling again. Financial stocks began to drag down the CAC and the French market regulator (AMF) moved to bank the short-selling of financial stocks. Now SocGen has decided to pursue legal action.
Of course it is questionable how much the one report is entirely to blame for the sell-off in SocGen. After U.S. lost its AAA credit rating following a downgrade by S&P all talks turned to France losing its credit rating as well, and French banks continue to take a hit in the market. Meanwhile, an incorrect report around the time also suggested that SocGen has also dumped gold futures at below-market prices.
Meanwhile, Moody’s is rumoured to be downgrading French banks and SocGen announced that it plans to boost its capital holdings by €4 billion through cost cuts and asset sales.
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