SAO PAULO, April 11 Brazil's security regulator
believes that tycoon Eike Batista engaged in insider trading,
newspaper Valor Economico reported on Friday, saying his oil
company waited 10 months to inform shareholders that four oil
fields were not commercially viable.
The former billionaire was selling shares of Oleo and Gas
Participações SA, then known as OGX, and a sister
company at the same time as he encouraged investors to buy more
stock and touted the fields' potential on Twitter, according to
Valor, which had access to the CVM regulator's investigation.
OGX said the Tubarao Azul, Tubarao Tigre, Tubarao Gato and
Tubarao Areia fields were not commercially viable in a filing on
July 1, 2013, kicking off the long decline of Batista's EBX
group in what is now considered Brazil's largest corporate
The CVM investigation showed Batista, whose companies are
now mostly in bankruptcy proceedings or have been sold, had
access to information that was not communicated to the market
when he sold shares of OGX and shipbuilder OSX prior
to July 1, allegedly violating Brazil's rules on using
privileged information, according to the paper.
The Valor article said Batista and OGX executives had
suspected the recoverable oil in the fields was smaller than
initially expected since 2011.
In September of 2012, board members were presented with new
estimates that confirmed drilling the areas would not yield a
profit under any scenario, Valor said, and that Batista
subsequently engaged in insider trading.
Valor did not say what punishment Brazilian could face.
Under Brazilian law, stock violations can carry administrative
and criminal penalties.
OGX shares have lost most of their value since the company
went public in 2008 and are no longer a component of Brazil's
Bovespa index. OSX is entirely reliant on OGX for revenue.
Representatives for Batista, Oleo and Gas, and the CVM
regulator did not immediately respond to request for comment.
(Reporting by Caroline Stauffer, Jeb Blount and Marcela Ayres;
Editing by Steve Orlofsky)