Astor Asset Management 3 Ltd Initiating Class Action Lawsuit Inquiry Against Ricardo Benjamín Salinas Pliego of Grupo ELEKTRA for Stock Manipulation & Securities Fraud

ASTOR ASSET MANAGEMENT 3 LTD INVESTIGATES POTENTIAL LEGAL ACTION OVER ALLEGED STOCK PLEDGING AND MARKET MISCONDUCT

(IN BRIEF) Astor Asset Management 3 Ltd is forming a class action lawsuit against Mr. Ricardo Benjamín Salinas Pliego and Grupo Elektra (ELEKTRA) for failing to disclose key financial activities, such as trades, loans, and share pledges, which allegedly caused harm to shareholders. The lawsuit claims that the lack of transparency led to market manipulation and an artificially inflated stock price. Investors who purchased ELEKTRA shares in the past seven years may be eligible for compensation as part of the class action.

(PRESS RELEASE) VANCOUVER, 9-Sep-2024 — /EuropaWire/ — Astor Asset Management 3 Ltd, in collaboration with its global legal team, is in the process of forming a class of investors to pursue a class action lawsuit against Mr. Ricardo Benjamín Salinas Pliego as well as against Grupo Elektra, S.A.B. de C.V. (ELEKTRA). The lawsuit aims to address Mr. Salinas’s failure to adhere to regulatory obligations regarding the disclosure of trades, loans, and pledges of shares, which we believe has caused material harm to shareholders.

Overview of Allegations

Our investigation reveals a troubling pattern of abusive conduct by Mr. Ricardo Salinas, who, together with his family, owns approximately 74% of ELEKTRA’s shares and are deemed Controlling Persons. Their failure to disclose material information regarding their financial dealings has led to an environment of misinformation and market manipulation, negatively impacting ELEKTRA’s shareholders.

Mr. Ricardo Salinas has repeatedly been fined by Mexican regulatory authorities for not reporting trades or material events as legally required, demonstrating a history of abusive behavior in disregarding regulatory obligations. More concerning is Mr. Salinas’s recent loan with Astor Asset Management 3 Ltd, in which he pledged 7.2 million ELEKTRA shares as collateral without making the necessary public announcement. Such a failure to disclose material information breaches securities regulations and compromises market fairness by depriving investors of key information they need to make informed decisions.

No loans, pledges, or other trading activities have been reported by Mr. Salinas or his family. Mr. Salinas has blocked inquiry into his personal bank accounts by Mexican securities regulators CNBV. This lack of transparency is highly unusual, particularly given the family’s control over a $10 billion USD company, raising further concerns about potential manipulation.

The Importance of Transparency in Insider Trading

Investors rely on timely and accurate disclosures from insiders to gauge their confidence in the company and to make informed investment decisions. When insiders like Mr. Ricardo Salinas engage in financial transactions such as loans or pledging of shares, it can signal financial stress or a lack of confidence in the company’s future. Conversely, when insiders buy shares, it often indicates their belief in the company’s growth potential.

When these critical financial activities are not disclosed, investors are left in the dark, leading to a distorted market and degradation of shareholders’ investments. Investors may continue to buy shares under the false impression that the company is in a stronger financial position than it actually is. This creates an inflated stock price, where investors end up overpaying due to incomplete or erroneous information.

In the case of ELEKTRA, Mr. Salinas’s repeated failure to disclose financial activities such as loans and pledges of shares may have artificially propped up the stock price, misleading investors about the company’s true value. When large shareholders like the Salinas family obscure their financial dealings, it prevents the market from functioning transparently and efficiently, ultimately leading to misrepresentation and financial losses for shareholders.

Evidence of Manipulation

There is strong evidence suggesting that shares of Grupo Elektra are currently substantially overvalued, which may be a direct result of Mr. Salinas’s undisclosed financial activities. Price to Earnings (P/E) reports show that ELEKTRA shares are drastically overvalued. The P/E of Grupo ELEKTRA is trading at 124, while competitors in the same industry maintain an average P/E ratio of around 7 times. The earnings of Grupo ELEKTRA have been declining for years, and the price of ELEKTRA shares is not in line with its peers.

Simply Wall Street in 2022 reported fair value for shares of Grupo ELEKTRA at 360 MXN. On July 26, 2024, the last trading day, the shares traded at 960 MXN. Our financial model reflects fair value of around 200 to 250 MXN.

These factors—combined with the fact that no public disclosures have been made about the Salinas family’s financial dealings—strongly suggest that manipulation is taking place. The inflated stock price benefits the Salinas family while harming ordinary shareholders, who are unknowingly investing in a company that is not accurately represented in the market.

Mr. Salinas has previously been charged with fraud by the United States Securities and Exchange Commission and has repeatedly been fined by Mexican securities regulators CNBV for failing to disclose trades and material information.

Legal Grounds for the Lawsuit

Astor Asset Management 3 Ltd and its global attorneys are seeking to form a class of investors who have purchased shares of ELEKTRA within the past 7 years. The class action lawsuit will focus on the Salinas family’s failure to make legally required announcements regarding their financial activities, including loans and pledges of shares. This failure to disclose may be considered both a misrepresentation and a fraudulent act under the securities regulations of Mexico, Germany, Spain, the jurisdictions where ELEKTRA shares are traded.

Grupo ELEKTRA owns Advance America, a large payday loan company, with many locations throughout the United States of America. Furthering alleged securities manipulation through Advance America may give rise to a class action suit in the United States of America for using the territory of the United States of America to further the stock manipulation.

The lawsuit will argue that the Salinas family’s failure to disclose these material facts has caused significant financial harm to investors by artificially inflating the stock price. As a result, investors who purchased shares of ELEKTRA may be entitled to compensation for their losses.

Why Disclosure is Critical

The requirement to disclose financial activities like loans and pledges of shares exists to protect investors and ensure that they have a complete and accurate picture of a company’s finances. When insiders, particularly those with significant control over the company, fail to disclose such information, it undermines investor confidence and the integrity of the market.

Investors need to know when insiders are buying or selling securities to establish whether insiders have confidence in their own company’s performance. Similarly, when insiders take out loans or pledge shares, it may indicate liquidity issues, signaling to the market that the company or its executives may be under financial strain. Failure to disclose such information prevents investors from making informed decisions, often leading investors to overpay for shares that are not worth their present market price.

The repeated failure of the Salinas family to disclose their financial activities has likely caused significant financial losses to ELEKTRA’s shareholders. The class action lawsuits to be filed in several jurisdictions seek to hold the Salinas family accountable for their lack of transparency and to seek compensation for the shareholders who have been harmed by these actions.

Call to Action

If you have purchased shares of Grupo Elektra, S.A.B. de C.V. (ELEKTRA:MX) in the last 7 years, you may be entitled to damages as part of this class action lawsuit. We are actively seeking investors from Mexico, Europe, and the United States of America to join the class and pursue compensation for their financial losses.

Media contact:

Mariia Mitsa
press.inquiries@astorassetgroup.com

Astor Asset Management 3 Ltd
777 Dunsmuir Street
Suite 1400
Vancouver, BC V7Y 1K4

Here are some Frequently Asked Questions (FAQs) related to the class action lawsuit against Mr. Ricardo Benjamín Salinas Pliego and Grupo Elektra (ELEKTRA):

1. What is the class action lawsuit about?
The lawsuit seeks to address the failure of Mr. Ricardo Benjamín Salinas Pliego and his family to disclose important financial activities, such as trades, loans, and pledges of shares, which allegedly led to market manipulation and caused financial harm to Grupo Elektra (ELEKTRA) shareholders.

2. Who is leading the class action lawsuit?
Astor Asset Management 3 Ltd, in collaboration with its global legal team, is leading the class action lawsuit against Mr. Ricardo Benjamín Salinas Pliego and Grupo Elektra.

3. What are the allegations in the lawsuit?
The primary allegations include the Salinas family’s failure to disclose material financial activities, such as loans and pledges of shares, which may have artificially inflated ELEKTRA’s stock price and misled investors about the company’s financial health.

4. Why is disclosure of trades and financial activities important?
Disclosure of financial activities like trades, loans, and share pledges is critical for investors to have accurate information about a company’s financial position. This transparency allows investors to make informed decisions and ensures the integrity of the market.

5. What financial harm was caused to shareholders?
The lawsuit claims that the lack of transparency led to an inflated stock price, meaning investors may have unknowingly purchased shares at an overvalued price, leading to financial losses.

6. How does this case affect shareholders of Grupo Elektra?
Shareholders of Grupo Elektra who purchased shares within the last seven years may have been financially harmed due to the alleged market manipulation and could be entitled to compensation through the class action lawsuit.

7. What evidence supports the claims of market manipulation?
Evidence includes a significant overvaluation of ELEKTRA’s stock price compared to industry peers, the company’s declining earnings, and the failure of the Salinas family to disclose financial transactions. Price to Earnings (P/E) ratios also indicate inflated valuations of ELEKTRA shares.

8. Who can join the class action lawsuit?
Investors who purchased shares of Grupo Elektra (ELEKTRA
) in the past seven years and suffered financial losses as a result may be eligible to join the class action lawsuit.

9. What jurisdictions are involved in the lawsuit?
The lawsuit is being filed in several jurisdictions, including Mexico, Germany, Spain, and the United States, where ELEKTRA shares are traded.

10. How can I join the class action lawsuit?
If you have purchased shares of Grupo Elektra in the last seven years and believe you have been financially harmed, you can contact Astor Asset Management 3 Ltd or its legal team to inquire about joining the class action.

11. What compensation could be awarded to shareholders?
The lawsuit seeks to recover damages for investors who suffered financial losses due to the alleged manipulation and lack of transparency by the Salinas family and Grupo Elektra.

12. Is there a deadline to join the class action?
Yes, there may be deadlines depending on the jurisdiction and the progress of the lawsuit. Shareholders are encouraged to act quickly and seek legal advice to ensure they do not miss the opportunity to join.

13. What is the importance of this lawsuit?
This lawsuit aims to hold controlling persons of companies accountable for transparency and ethical conduct, ensuring market fairness and protecting the financial interests of shareholders.

14. Has Mr. Ricardo Benjamín Salinas Pliego faced legal issues before?
Yes, Mr. Salinas has previously been charged with fraud by the U.S. Securities and Exchange Commission (SEC) and has been fined multiple times by Mexican regulators for failing to disclose trades and material financial information.

15. How can I get more information about the lawsuit?
For more information, interested parties can contact Astor Asset Management 3 Ltd or visit their website to learn about joining the class action and updates on the case.

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SOURCE: Astor Asset Management 3 Ltd