Brazilian Mogul faces charges of Insider Trading 

The Brazilian businessman Elike Batista was accused of manipulating the share price of his now-bankrupt petroleum company, OGX, and engaging in insider trading.

The investigation from the public prosecutor began in April.

If a trial takes place and Mr. Batista is convicted, he could in theory go to prison for as long as 13 years, but no one in Brazil, where the justice system is seen as lenient on white-collar crime, has ever gone to jail for insider trading.

A court freeze up to 1.5 billion reais ($ 645 million) in assets belonging to Mr Batista and his family was requested. The prosecutors wrote in their charges that this sum “equals the damage that the stock market suffered as a result of the accused’s criminal conduct.”

The Brazilian securities regulator, the C.V.M., is also investigating Mr. Batista, but like the Securities and Exchange Commission in the United States, the C.V.M. can impose only civil penalties, like fining a guilty party or barring a person from serving as a corporate officer.

In October 2012, as OGX’s stock market price was falling, Mr. Batista issued a put option in which he promised to use his personal fortune to buy $1 billion worth of OGX stock if the company requested it.

The share price of OGX rallied, but in September 2013, when the company’s management asked Mr. Batista to fulfill the put option, he refused.

OGX then defaulted on $5.8 billion worth of bonds and became Latin America’s largest-ever corporate bankruptcy. Mr. Batista’s lawyers have so far kept him from having to make the $1 billion payment.

“If they cannot prove that he knew that the company had no future, none of these accusations will be valid, and so far they haven’t presented, in public at least, any such proof,” a professor of securities law told.

Source: NYT

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