One trader cited a report by French magazine Challenges about possible accounting malpractices at Rallye - something which Rallye denied.
French lawyer Sophie Vermeille sent the French accounting regulator a message accusing Rallye of having inflated over the years the value of Casino in its accounts in concert with auditors, wrote Challenges magazine.
“I plan to show to public authorities that Rallye auditors have, with no interruption, approved a valuation of Casino shares in the accounts of Rallye at 80.30 euros per share (while the current share price today is 39 euros),” Vermeille said in a message to the French regulator, according to Challenges.
When contacted by Reuters, Rallye replied: “Rallye has always worked in full respect of French accounting rules.”
Casino shares at one point fell by around 3 percent, before recovering a touch to stand 1.5 percent lower at 40.80 euros in late session trading.
Casino shares have tumbled roughly 20 percent in 2018 on concerns about its debts and those of Rallye.
Chief Executive Jean-Charles Naouri controls French group Casino through Rallye.
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.
Casino reports third quarter sales later on Thursday.
Reporting by Blandine Henault, Dominique Vidalon, Pascale Denis; editing by Richard Lough/Sudip Kar-Gupta
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