Hearing about insider trading cases in the US is pretty routine. We hear about them frequently. But in Brazil, history has yet to be made. No one in Brazil’s history has gone to jail for insider trading. But that might change.
Eike Batista, once Brazil’s richest man and listed as No. 7 on The Forbes World’s Billionaires list, had dreams of becoming the richest man in the world. That is, until his net worth plummeted from a high of $30 billion in early 2012 to a negative net worth earlier this year.
Batista has now made history as the first person in Brazil to have his insider trading case go to trial. It will likely be somewhere between January and March 2015 before a verdict is reached in the case, but no matter how it turns out, it is likely to change how Brazilian attorneys view insider trading from here on out.
Although Batista denies any wrongdoing, he faces not only two counts of insider trading, but also counts of market manipulation, criminal conspiracy, misleading investors, and false representation. If convicted on all accounts, Batista would face a minimum of six years and a maximum of thirteen years in prison. Since Batista is a first-time offender, Batista will likely face no more than eight years even if convicted of all charges.
There are a variety of different events that have led up to Batista facing trial. First, he sold 236 million reais (approximately $98 million) worth of stock in his oil company, OGX. Batista argues that he needed to sell the stocks to pay off debts. While he was selling off his own shares in the company, though, he is accused of manipulating the share price of his oil company by using Twitter to encourage his followers to invest in OGX. He is also being questioned about his failure to keep his promise to invest $1 billion in the then failing company. Although the defense argues the evidence against Batista is weak, only time will tell how the case will turn out.
