Greek retailer Folli Follie plunged into crisis in May 2018 when a US-based equity fund reported that it had overestimated the number of its points of sale in investor reports and was in poor financial health (Theophile Bloudanis)

Athens (AFP) – Greece’s stocks watchdog on Tuesday slapped a 20.3 million euro ($23 million) fine on the management of Folli Follie, one of the country’s few global retailers, for breaching market manipulation rules.

The watchdog, which in June had sued the company’s management, imposed the fine on the company’s founder, his son and wife, and several other former company officials.

Formerly a Greek success story with booming exports to Asia, Folli Follie was plunged into crisis in May when US-based equity fund Quintessential Capital Management reported that it had seriously overestimated the number of its points of sale in investor reports, and was in poor financial health.

“We came across convincing evidence suggesting an unprofitable, rapidly shrinking business, with decreasing revenue and negative cash flows,” QCM said.

The fund claimed it had found evidence of fewer than 300 points of sale, compared with the 630 mentioned in company’s 2016 annual report.

The report caused Folli Follie’s share price to plummet and the company issued an angry retort, accusing QCM of distorting the facts and labelling them “speculators”.

But with the share price continuing to fall, the company was forced on May 25 to request a suspension of its shares on the Athens stock exchange.

It also called for an independent audit of its financial statements.

Founded in 1982 in Athens, Folli Follie became one of Greece’s most successful companies in a 35-year span.

It expanded continuously, aggressively building a global presence and signing distribution deals with some of the biggest fashion and cosmetics brands in the world.

Folli Follie’s biggest success came on the Asian market, and in 2011 it caught the eye of Fosun, one of China’s top holding companies, which acquired a 9.5 percent stake to become a strategic investor.

Fosun later bolstered its holdings to over 13 percent, and its stake grew to 15 percent last year amid a buying spree to shore up Folli Follie’s tumbling stocks.

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