SANTIAGO, Jan 31 (Reuters) - Chile’s securities regulator on Friday formally accused some of the country’s largest brokerages of breach of regulations in an ongoing investigation into market manipulation linked to trading in fertilizer group SQM and its holding companies.
Regulator SVS has been probing trades at LarrainVial SA Corredora de Bolsa; Banchile Corredores de Bolsa SA, a unit of Banco de Chile ; Citigroup Global Markets and Linzor Asset Management, now called CHL Asset Management Chile.
The case “revolves around the supposed responsibility of different entities and persons in market operations between the years 2009, 2010 and 2011, which would have affected the normal functioning of the stock market,” the SVS said.
The companies and individuals accused by the SVS have up to 20 days to respond. After that, the regulator will decide either to apply sanctions or drop the charges.
In September, the regulator accused Julio Ponce, SQM’s chairman and the former son-in-law of the late dictator Augusto Pinochet, of buying up shares below market prices and then reselling them at above-market prices.
Among other things, the brokerages are being investigated for allegedly breaking the law that states “no person shall carry out transactions or encourage or try to encourage the purchase or sale of stocks by way of any deceitful or fraudulent act, practice, mechanism or scheme.”
LarrainVial and its executives, including chairman Leonidas Vial and the head of the company’s brokerage, Manuel Bulnes, bore the brunt of the regulator’s accusations.
LarrainVial said the accusations will give them the opportunity to “defend the total innocence of the company and its executives.”
“As we’ve insisted from day one, neither LarrainVial nor its executives have been part of a supposed scheme to benefit or hurt any investor,” the firm said, adding it would continue to collaborate with authorities in the investigation.
Banchile Corredores de Bolsa, whose former head of investments Cristian Araya is under investigation, said its lawyers were reviewing the accusations and preparing a defense to show the company acted correctly.
Chairman Ponce controls SQM through his ownership in holding companies Potasios, Norte Grande, Oro Blanco and Pampa Calichera .
LQ Inversiones Financieras, made up of the wealthy Chilean Luksic family’s Quinenco SA holding group and Citigroup Inc, has a roughly 51 percent stake in Banco de Chile.