SAO PAULO, June 12 U.S. investment firm Cartica Management LLC said on Thursday it added Itaú Unibanco Holding SA as a defendant in its lawsuit to stop the Brazilian bank from winning control of Chilean bank CorpBanca SA.
Cartica alleged Itaú, CorpBanca and billionaire Alvaro Saieh, CorpBanca's controlling shareholder, violated U.S. anti-fraud and disclosure rules.
In a statement, Cartica said Saieh, Itaú and CorpBanca were "continuing to withhold material information, and failing to correct material misstatements," even after it sued, claiming multiple violations of U.S. securities laws.
Control of CorpBanca would not only give Itaú a foothold in retail banking in Chile, but provide a way to expand in Colombia, South America's fastest-growing economy last year. Itaú is contending with slowing economic growth in Brazil, where it trails state-run lender Banco do Brasil SA.
Cartica's move, a rare instance of investor activism in the region, aims to upset Latin America's largest banking combination since 2008. Cartica, which oversees about $2 billion in assets, owns about 3.2 percent of CorpBanca's common shares.
A spokeswoman for Itaú in São Paulo did not have an immediate comment.
The firm amended terms of its lawsuit, Cartica v. CorpBanca, Saieh, et al., filed in April, to include Itaú and its Chilean unit as defendants. The case is pending in the U.S. District Court in the Southern District of New York.
The decision to add Itaú to the lawsuit was based on the "most recent material misstatements and omissions made by Saieh," Cartica said. "It has become clear to Cartica that Itaú is actively working with Saieh to close the transaction."
In its statement, Cartica alleged Saieh and the other defendants "made or permitted misleading statements and omissions that led to the transaction with Itaú on its current unfair and undervalued terms, without CorpBanca's minority shareholders having the opportunity to take any steps to protect their interests."
Saieh began putting parts of CorpGroup up for sale last year to raise cash after SMU, his retail holding company that owns supermarket chain Unimarc, disclosed accounting errors that forced it to increase its liabilities and breach its debt covenants. He also controls Chilean daily newspaper La Tercera.
Late last year, Saieh, a Chilean of Palestinian ancestry, began talks with Itaú on a merger, an outright sale or the creation of a structure allowing him to remain a relevant shareholder in CorpBanca, sources had told Reuters.
Saieh would benefit through proceeds from the sale of his shares in the Colombian unit of CorpBanca, a $950 million loan from Itaú, backed by CorpBanca shares, call options with no downside risk, and an opportunity for future Itaú business in certain Latin American countries, Cartica said. (Editing by Jeffrey Benkoe)