French AMF probe on Muddy Waters/Casino seen completed in 2019

PARIS (Reuters) - France's AMF stock market watchdog expects its investigation into criticism made by U.S. research firm Muddy Waters against French retailer Casino to be completed in 2019, AMF boss Robert Ophele told French newspaper Les Echos.

The AMF had first launched its probe in early 2016.

"It will likely be completed in 2019. It took us nearly three years, but because some parties operate abroad, it takes much more time," said Ophele.

In December 2015, Muddy Waters criticized Casino's accounting practices, saying the retailer was "dangerously leveraged" and managed for the short-term, prompting the worst slide in seven years in Casino's stock price.

Muddy Waters said at the time that it was "short" on Casino shares and credit, namely betting on a drop in Casino's stock and bond prices. Casino has rejected criticism by Muddy Waters, which no longer holds those short positions in Casino.

In the interview with Les Echos, Ophele also discussed the current row opposing Casino and its parent Rallye (NASDAQ: GENC) to some hedge funds represented by lawyer Sophie Vermeille.

These funds have that Rallye has flattered Casino's value in its accounts.

"A person cannot be portrayed as a 'whistle blower' if it is paid for that end. One cannot publicly say the accounts of a company are false or that it cannot pay a dividend without providing the proof applicable rules," said Ophele.

"Contrary to what has been said, Rallye has not changed its accounting method... French accounting rules do not require a valuation of holdings at market price," he added.

Casino is the main asset of Rallye, which has a 51 percent stake in the company.

Within the Casino group, dividends from Casino are used to maintain Rallye's debt interest payments. The shares of Casino that are held by Rallye are also pledged as collateral to banks in order for Rallye to obtain more financing.

(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)

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