MILAN – Brunello Cucinelli on Thursday afternoon firmly rejected allegations of irregularities in the company’s business activities in Russia. This, however, was not enough to avoid a sharp decline in its shares on the Italian Stock Exchange.

Trading was suspended earlier in the day and, after resuming, shares closed down 17.28 percent to 85.08 euros.

In a statement, the Solomeo , Italy-based luxury company said it is in full compliance with European Union regulations regarding operations in the Russian market. This was in response to media reports circulating earlier in the day triggered by Morpheus Research, which holds a short position in Brunello Cucinelli .

The hedge fund published a report based on a three-month investigation “involving interviews with former Cucinelli

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