The National Securities Market Commission (CNMV) has concluded that, with the information available, the Saudi group STC and its investment bank Morgan Stanley respected market regulations in their surprise entry into Telefónica. “In this case, with the information available today, collected in the exercise of the supervisory powers of the CNMV, there are no actions or circumstances that indicate that the applicable regulations have not been complied with in the recent notification of positions on Telefónica,” sources from the supervisory body tell this newspaper.

This concludes the open analysis after STC announced on the 5th that it had reached 4.9% of Telefónica’s capital, which now makes it the operator’s first shareholder with the intention of rising to 9.9%. The CNMV has monitored whether, in order to stealthily enter Telefónica, STC or its investment bank Morgan Stanley had exceeded a 3% stake without notifying the market, which would violate the regulations.

However, their conclusion is that they only exceeded that threshold on the day of the announcement. That is, they could have had 2.9% secretly acquired in previous weeks through various Morgan Stanley subsidiaries, but they only reached 4.9% together when they announced it.

The PIF sovereign fund, which is personally chaired by the Saudi crown prince Mohamed Bin Salman, has confirmed to the CNMV the ownership of 4.9% without the organization detecting irregularities.

Passing the CNMV examination does not yet imply that of the Government, which assures that it will analyze “rigorously” whether entry puts national security at risk since Telefónica is a strategic company.

“The regulations on notification of significant holdings in listed companies are harmonized at European level and are quite clear,” the CNMV points out, recalling that the body “has supervisory powers over the correctness of notifications and to require additional information from market participants.

As they emphasize, “neither the letter nor the interpretation of the regulations allow an investor who builds a shareholding to fragment or cut it into packages lower than the 3% threshold, to avoid or delay its publication.” Consequently, “whether it is done directly or through an intermediary, investment vehicles, banks or custodians; whether it is done through shares or through derivatives that give the right to acquire them and then exercise voting rights. This would be contrary to the applicable legal regime”.

The CNMV assures that it is a regulation that they constantly monitor. “In the past, when we have concluded defects in communication or lack of notification, we have exercised sanctioning power on numerous occasions.”