Brazil's CVM fines former Sadia employees $1.5 mln

Tue Dec 14, 2010 9:16pm EST

* Total fines amount to 2.6 million reais ($1.5 million)

* Individuals fined as much as 400,000 reais

BRASILIA Dec 14 (Reuters) - Brazilian securities regulator CVM on Tuesday slapped 2.6 million reais ($1.54 million) of fines on former Sadia employees for irregularities linked to derivatives trading.

Former members of Sadia's administrative council will each have to pay fines of either 200,000 reais or 400,000 reais ($236,267).

Food exporter Sadia was among the first listed companies in September 2008 to report losses stemming from bad currency bets using derivatives.

A strong real between 2004 and mid-2008 allowed companies to borrow from international and local banks using risky derivatives structures that helped cut their cost of credit as long as the currency kept gaining against the greenback. But the situation reversed in September 2008, when the deepening global credit crisis led to a sharp slump in the real.

Losses worth 2.5 billion reais from bets on currency derivatives forced food company Sadia into a merger with rival Perdigao.

The two companies formed Brasil Foods (BRFS3.SA), Brazil's biggest pork and poultry producer, in 2009.

($1=1.693 reais) (Reporting by Denise Luna; Editing by Steve Orlofsky)