Brazilian tycoon charged with market manipulation

AP News
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Posted: Sep 24, 2014 2:11 PM

SAO PAULO (AP) — Federal prosecutors in Sao Paulo have charged Brazilian tycoon Eike Batista with manipulating the stock market and causing billions of dollars in losses.

The prosecutor's office said in a statement issued late Tuesday that Batista and seven former directors of oil company OGX Petroleo e Gas Participacoes were charged with deceiving investors with false information regarding the company's production potential.

Prosecutors said the stock manipulation caused the market to lose more than $6 billion. A judge must accept the charges before the case can move to trial.

Telephone calls seeking comment from Batista's conglomerate EBX rang unanswered on Wednesday.

Prosecutors say OGX, created in 2007, didn't deliver on its promises to produce significant amounts of offshore oil even though it reported many finds since 2010, when its market-value reached $34 billion. In the first half of 2013, the company averaged output of just 8,500 barrels a day and racked up more than $2.5 billion in losses.

Critics say Batista lied to investors, citing a correction made in Oct. 2013 for a promising OGX offshore field. In 2012, OGX said the field held nearly 1 billion barrels, but a few weeks later it lowered that projection to 285 million barrels, too late for those who bought the company's stock.

At the time, Miriam Leitao, one of Brazil's top economic columnists, wrote on her blog for the O Globo newspaper that Batista's "main error was to declare that he had what he didn't, to mislead the investor."

On Sept.13, federal prosecutors in Rio de Janeiro filed similar charges of stock market manipulation against Batista. He was also charged of using privileged information to profit illegally from sale of the company's shares in 2013.