Spain to restructure its stock market after Gowex scandal

Gowex opened bankruptcy proceedings after CEO admitted falsifying company results

Gowex CEO and founder Jenaro Garcia resigned after admitting he presented fictitious accounts

Gowex CEO and founder Jenaro Garcia resigned after admitting he presented fictitious accounts

Thu, Jul 10, 2014, 15:22

The Spanish government is planning to reorganise the framework governing the country’s stock market in response to the recent scandal surrounding technology firm Gowex.

Economy minister Luis de Guindos said that companies with a capital of over €500 million will no longer be able to remain on the MAB alternative stock exchange, where Gowex had been listed. Instead they will have to transfer to the larger continuous market.

“We will find a balance and the MAB will keep operating,” Guindos told a forum organised by the financial newspaper Expansión on Wednesday evening. “We will have more firms [ON THE MAB]but it has to be within a framework of control and information.”

Wifi provider Gowex opened bankruptcy proceedings at the weekend after its chief executive, Jenaro García, admitted to falsifying the company’s results over the last four years. García’s confession came days after short seller Gotham City Research issued a damning report accusing the company of offering results that were “too good to be true”.

Gowex had been widely seen as a major Spanish success story and was estimated as being worth €1.4 billion shortly before its collapse.

Guindos also said the government will tighten up controls of those companies that are listed on the MAB, which is a source of alternative financing for small- and medium-sized companies. Audits will be a particular area of focus.

Spanish news agency EFE reported on Thursday that M&A Auditores, which audited Gowex, was sanctioned by the government audit watchdog in 2010 for lack of independence in work it carried out on another firm.

Four companies have announced their intention to exit the MAB since the Gowex case exploded, apparently due to concerns about its credibility.