Prisoner’s dilemma

15 September 2014 By Christopher Swann

Prosecutors have accused the fallen energy tycoon of insider trading and are trying to freeze his assets. A conviction would be a first. The case could just as easily expose the country’s legal shortcomings. That presents an opportunity to make good use of the Batista fiasco.

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Brazilian federal prosecutors said on Sept. 13 they had filed criminal charges against Eike Batista, Reuters reported, accusing the fallen tycoon of market manipulation and seeking to freeze up to $1.5 billion reais ($641 million) worth of his financial assets and properties.

The Rio de Janeiro prosecutor’s office said it is charging Batista for deceiving investors with a “simulated” promise two years ago to invest $1 billion in oil company OGX, now known as Oleo e Gas Participacoes, if shares fell to a certain level. Batista failed to fulfill his promise, known as a put option, when the shares touched that level.

Batista is also accused of using privileged information on several occasions last year to make a profit of 236 million reais with the sale of company stock, the statement said. The charges against Batista could carry up to 13 years in prison.

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