MADRID — Spain’s National Securities Market Commission (CNMV) has opened an investigation against Telefonica prexy Juan Villalonga.
Move is aimed at establishing if Villalonga violated securities regulations in buying an option on shares in Telefonica during merger talks with WorldCom-MCI in early 1998.
Villalonga denied the use of privileged information on June 16, reacting to articles in Spanish newspaper El Mundo accusing him of insider trading.
Some believe these articles represent a witch-hunt, implicitly supported by the Spanish government, whose purpose is to dislodge Villalonga from power at Telefonica as he has increasingly distanced it from governmental influence.
Telefonica shares fell 4.67% after the CNMV’s confirmation of an investigation and amid rumors that Villalonga’s position at Telefonica is increasingly shaky.