* Italy market regulator fines Esteves 350,000 euros
* Fine lands shortly before BTG Pactual's planned listing
* BTG Pactual says ruling will not affect activities
* Bank plans to give investors five days to reconsider bids
By Silvia Aloisi and Steve Slater
April 16 André Esteves, the billionaire boss of
Brazil's BTG Pactual, has been fined 350,000 euros ($457,900) by
Italy's financial regulator for insider trading, just 10 days
before his investment bank's looming stock market listing.
BTG Pactual said its activities would be unaffected by the
ruling against Esteves, who owns 24 percent of the Brazilian
bank, making him one of Brazil's richest executives. But it will
force the bank to amend its prospectus, give investors the
option of reconsidering bids for BTG shares, and puts a cloud
over one of this year's highest profile bank deals.
According to the Italian market watchdog Consob, Esteves
made use of privileged information about a planned joint venture
involving Italian meat company Cremonini when he bought
Cremonini shares in November 2007.
In a statement, BTG Pactual said Esteves believed the
allegations had no merit and was determined to appeal the
decision. The firm had said in its prospectus this month the
outcome of the case should have no impact on its upcoming public
Late Monday, a source familiar with the matter told Reuters
that BTG, in light of the fine and allegations by the Italian
regulator, will give investors five business days to reconsider
their bids for BTG shares. BTG declined to comment.
Consob said Esteves knew members of the family controlling
Cremonini's joint venture partner JBS, a major Brazilian beef
producer and a customer of Banco Pactual, a prior incarnation of
the investment bank.
The trades were carried out on Esteves's personal account at
a time when he was a senior banker at Swiss bank UBS AG
which had acquired Banco Pactual before Esteves and
partners bought the Brazilian bank back in 2009.
The regulator also barred Esteves from holding senior
corporate and board positions in Italy for six months. In
February it had ordered the seizure of 4.2 million euros of his
BTG Pactual and some of its larger investors could raise up
to 4.1 billion reais ($2.2 billion) in the bank's initial public
offering (IPO). The shares should begin trading on Sao Paulo's
Bovespa stock exchange on April 26.
The prospectus for the share sale, released on April 3, said
Esteves was the subject of "an ongoing civil, non-criminal
investigation in Europe in connection with certain trades in the
securities of a European market issuer made by him in his
personal capacity in 2007."
"Our controlling shareholder believes that the allegations
are without merit, and currently intends to appeal a finding (if
any such finding occurs) against him in such matter," the
prospectus also said.
Consob said it notified Esteves of its accusations in
November 2010. It said Esteves denied the allegations.
Calling Esteves's explanations "incoherent", Consob said
Esteves started buying Cremonini's shares the day after a letter
of intent regarding the joint venture project was given to
Cremonini. The stock purchases were carried out over 10 days.
JBS bought half of a Cremonini unit in December 2007 for 225
million euros. The joint venture ended last year after years of
wrangling over the partnership.
Esteves, 43, rose through the ranks at Banco Pactual before
helping sell it to UBS in 2006 by about $3.1 billion. Shortly
after quitting UBS, Esteves founded BTG and teamed up with some
partners to buy Pactual back from Swiss lender for $2.5 billion
BTG Pactual and Esteves himself have become symbols of
Brazil's growing economic might, competing head to head with
global investment banks in a region with bustling capital
markets and surging demand for wealth management services.
He has a net worth of about $3 billion and is Brazil's 13th
richest individual, according to Forbes magazine's rich list.
The IPO would be the first by an investment bank based in
Brazil, and will raise the bank's profile and that of Esteves
globally. Based on an acquisition it made earlier in the year,
BTG Pactual is worth $14.8 billion.
The prospectus said regardless of the outcome of the
investigation, the bank did not believe there would be an
adverse effect on BTG Pactual, including on Esteves's capacity
to serve in his present role.
UBS declined to comment on the case.
Esteves, a mathematician who started as a computer
technician at Banco Pactual in 1989 at age 21, became a managing
partner in 2002. After the UBS takeover, he worked in London and
was appointed global head of UBS's fixed income, currencies and
commodities group in October 2007.