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Court Files Securities Charges Against Brazil’s Former Richest Man

Thursday, September 25, 2014 4:03

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(Before It's News)

Federal prosecutors said Wednesday that they have filed charges against businessman Eike Batista, up to last year the richest man in Brazil, for market manipulation after concluding that he used false information to induce thousands of stockholders to invest in one of his companies.

The indictment against the man considered to be the world’s seventh-richest before his empire collapsed was filed in Sao Paulo courts by federal prosecutor Karen Kahn.

The accusation also includes seven executives with OGX, the oil company that was controlled by Batista before seeking protection under Brazil’s bankruptcy law, and it seeks to benefit the stockholders who lost their savings by investing in that firm.

“The group promised billions in petroleum extraction operations in the Campos and Santos ocean basins, but their projections were based on fake data regarding the capacity of the reserves, which caused a precipitous drop in the value of the company’s shares and resulted in serious losses to those who had acquired the shares,” the complaint said.

Prosecutors estimate the losses resulting from the depreciation of OGX shares between 2010 and 2013 to be around 14.4 billion reais (about $6.26 billion).

Between 2009 and 2013, OGX sent 55 “relevant” communiques to the Sao Paulo stock exchange with information about the alleged potential of the company which spurred heavy demand for the firm’s shares, prosecutors allege.

Press releases emphasized the alleged huge potential of the oil deposits discovered by the company in four different zones in the offshore Campos and Santos basins, where Brazil’s largest petroleum reserves are located.

Studies carried out by the company in 2011, however, proved that exploration of the zones was not economically viable due to the elevated production costs and the difficulties inherent in exploiting deep-water petroleum fields, prosecutors said.

Published in Latino Daily News