RIO DE JANEIRO, BRAZIL – Entrepreneur Eike Batista has been sentenced to eight years and seven months in prison, and to pay a fine of R$118.6 million (US$29.7 million) for using privileged information and for market manipulation in negotiations with assets of OSX, the company owning the shipyard and the Port of Açu, in the former EBX group.
The sentence, issued by Judge Rosália Monteiro Figueira, was published on Monday,
September 30th, according to the Association of Minority Investors (AIDMIN), a party in the lawsuit, instigated by the Federal Prosecutors’ Office (MPF). The lawsuit was brought in 2014.
The operations investigated in the case occurred in 2013. In one instance, although the decision to keep the FPSO OSX-2 platform in Asia, for the production of oil from the Tubarão, Tigre, Gato and Areia fields – operated by the oil company OGX and which had reserves well below expectations – was taken at a meeting on April 15th, 2013, was omitted from a market release issued on May 17th, 2013.
“Despite being aware of this information, the accused continued to broadcast to the market prospects that, more than optimistic, proved to be fraudulent,” states the ruling.
According to the investigations, this has misled investors. Meanwhile, Eike “disposed of his shares in OGX (between May 24th and June 10th, 2013) and his OSX shares on April 18th, 2013, which proves the accused’s intention to manipulate the capital market”.
For the judge, “the specific criminal conduct is duly evidenced in the record, and there are no factors that could rule out illegality or culpability” of Eike. “Therefore, without evidence in the record to exclude or even reduce the culpability, the judicial conclusion, in light of the body of evidence, is for conviction,” states the ruling.
The judge used the sentence to criticize the inspection ability of the Brazilian Securities and
Exchange Commission (CVM). According to the judge, Eike “took advantage of the weaknesses of the capital market inspection bodies”.
“Unlike what happens in Brazil, in the US capital market the Securities and Exchange Commission-SEC is proactive in the fight against the use of privileged information and market manipulation, with strict rules that make it impracticable for companies to disclose artificially based news to the securities market, without any factual basis”, states the decision.