Shares of Tecnoglass fell in pre-market trading on Thursday morning after short seller Hindenburg Research alleged that the company had "cartel connections", "undisclosed family deals" and "accounting irregularities".
"We have identified serious red flags regarding management and numerous undisclosed related party transactions that call the company’s reported financial results into question," Hindenburg wrote on Thursday morning.
In their report, the activist short seller wrote that they "strongly suspect" that Tecnoglass "has faked a significant portion of its revenue."
The report says: "All told, we have no faith in the company’s financials given management’s background and the irregularities we have uncovered. We encourage its auditor to do a full review of its customer transactions and outstanding balances."
Hindenburg says its "months-long investigation" included a "review of US and Colombian court records, securities filings, corporate registrations, property records, export records and media reports going back decades."
The report also ties Tecnoglass to the Cali Cartel: "Following the crackdown on the Cali cartel, family members of individuals responsible for laundering money for a successor cocaine trafficking cartel known for its death squad appear as key early shareholders in Tecnoglass and the Daes’ related manufacturing business. They remained shareholders as recently as 2020."
You can read the full report here:
NEW FROM US:
— Hindenburg Research (@HindenburgRes) December 9, 2021
Tecnoglass—Cocaine Cartel Connections, Undisclosed Family Deals, And Accounting Irregularities All In One Nasdaq SPAChttps://t.co/Cuk3B9JkHv $TGLS
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The report concludes:
The long, storied list of criminal allegations involving Jose Daes and Christian Daes – the two pillars of the enterprise – speaks for itself.
While the past is crucial for...