(Reuters) -Shares in Polish fashion group LPP plunged 36% on Friday, wiping $3 billion off the company's value, after short seller Hindenburg Research questioned the company's sale in 2022 of its Russian assets.
LPP, whose brands include Reserved and Sinsay and which trades in 39 countries, denied allegations in a Hindenburg Research report that it had kept control of its Russian business after a "sham" sale and that it continued to sell in Russia.
"We strongly deny the information found in the Hindenburg Research material," LPP said.
"The report prepared by Hindenburg Research is part of an organised disinformation attack prepared for five months, seeking to decrease the share price of LPP Group."
Hindenburg Research did not immediately reply to an emailed request for comment.
In its report, published on Friday, Hindenburg Research said its allegations were based on evidence including from a former senior LPP employee and a former manager, operational details, anonymous shoppers, barcodes and internal documents.
In a statement, LPP said it had notified the Polish prosecutor's office of a suspected criminal offence to harm the company and its investors based on "false or manipulated information" published by Hindenburg Research.
LPP does not conduct commercial activity on the territory of the Russian Federation, the company said. Responding to another Hindenburg allegation, it said LPP did not make shipments of goods to Russia via Kazakhstan.
LPP said in a May 2022 regulatory filing that it would sell its Russian company RE Trading to a Chinese consortium. Its financial reports state that it suspended its operations in Russia and closed its last store on March 30, 2022.
On Friday, LPP said that sale had been confirmed by a Russian court, adding: "The sale transaction pertaining to the Russian company was not fictitious and did not involve bookkeeping or accounting manipulation."
It said the buyer was an independent company with no capital or personal ties to LPP.
"LPP does not, directly or indirectly, control the current owners and directors of the company that purchased RE TRADING OOO," it said.
Russia was LPP's second-largest market after Poland before the war in Ukraine, accounting for 19.2% of its group revenue in 2021/22.
Hindenburg Research in its report did not disclose the size of its short position in LPP.
The financial research firm, founded in 2017 by Nathan Anderson, looks for accounting irregularities and mismanagement and takes short positions in companies where it considers there is credible evidence of these.