November 14, 2012 / 5:30 PM / 5 years ago

UPDATE 1-Colombia opens criminal probe into Interbolsa collapse

BOGOTA, Nov 14 (Reuters) - Colombian authorities opened a
criminal investigation into the collapse of Interbolsa, the
attorney general said on Wednesday, in a deepening scandal
involving the Andean nation's largest brokerage.
    Colombia is liquidating Interbolsa after the company failed
to make a scheduled payment, forcing the central bank to inject
cash into the economy and the government to repeat that it's a
one-time case and not indicative of wider financial problems in
Latin America's fourth-biggest economy. 
    Attorney General Eduardo Montealegre cited conflicts of
interest, possible share price manipulation and "hiding"
information as part of the investigation.
    "The Attorney General's Office ... will initiate a criminal
investigation to determine whether these behaviors, which are
possibly administrative offenses, have criminal relevance or
not," Montealegre told reporters.
    The probe may have wider implications as far as how overseas
investors see Colombia and the way its companies to operate. 
    The financial market regulator essentially took over
Interbolsa two weeks ago after it was unable to make a payment
to a local bank due to a liquidity squeeze tied to repurchase
agreements, or repos.
    Interbolsa, with about 50,000 clients and one-third of daily
operations on the stock market, also ceded control of its local
bond portfolio to Bancolombia SA. 
    Market players have so far reacted with caution over
Interbolsa's woes, agreeing it is probably an isolated case but
also staying alert to any signs of a spillover to other
financial institutions and contagion from perceived risk.  
    Earlier on Wednesday, Finance Minister Mauricio Cardenas
told local radio he had ordered an investigation into operations
by Interbolsa and Curacao-listed investment fund Premium
Capital, which has joint shareholders with the brokerage.

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