Brazil's Batista faces insider trading probes
By Jeb Blount and Juliana Schincariol
RIO DE JANEIRO (Reuters) - Eike Batista, who was Brazil's richest man for most of the past decade, is under investigation by securities industry watchdog CVM for allegedly engaging in insider trading while he chaired his now-bankrupt oil-producing and shipbuilding firms.
In a statement sent to Reuters late on Friday, Rio de Janeiro-based CVM confirmed that Batista is a respondent in six of nine probes that executives of his Grupo EBX conglomerate are facing for breaching securities rules. In two of them, regulators are examining whether Batista allegedly took advantage of his access to privileged information.
CVM also listed a dozen probes questioning financial and other data unveiled by oil company Óleo and Gás Participações SA and four more firms he controlled through EBX. If the probes lead to criminal charges against Batista, it would be yet another major blow to a businessman once hailed as the nation's model entrepreneur and a symbol of Brazil's economic success.
"If this turns out to be true it will be excellent news for investors who lost so much with OGX," said Rodrigo Bornholdt, a partner with Bornholdt Advogados in Joinville, Brazil, which has been organizing minority shareholders for a lawsuit against OGX. "This would make it much easier for them to sue Batista, the corporate directors and the company."
The demise of his energy, logistics and mining empire, which two years ago was valued at about $60 billion, ended up in OGX filing for Latin America's largest-ever bankruptcy in October.
Under CVM regulations, Batista could face fines and be banned from running a listed company. But he could also face criminal prosecution - which could put him in jail for as many as five years - and separate civil penalties if individual investors and companies sue him for damages, Bornholdt added.
Representatives for Batista, Oleo and Gas, and OSX did not immediately respond to requests for comment. CVM's insider trading case for OGX is under the code RJ2014-0578 and for OSX under the code RJ2013-13172.
According to a Valor Econômico newspaper report early on Friday, CVM wants to determine whether Batista also withheld information that was unfavorable to some of his business while encouraging investors to buy more stock in his companies. During that time, Batista sold shares of the company, as well as its sister company and shipbuilder OSX Brasil SA. Continued...