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Minority shareholders accuse operator with shares in state-owned Brazilian oil company Petrobras of 'insider trading'

Suspicious operation took place after a meeting between President Jair Bolsonaro and several of his ministers

Brazilian state-owned oil company Petrobras logo.
Brazilian state-owned oil company Petrobras logo. Photo: Reuters/Sergio Moraes
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  • An operator bought a significant volume of options from the oil company betting on the fall of the state-owned company’s shares, as reported firsthand by journalist Malu Gaspar, a columnist for O Globo;
  • The operation happened after President Jair Bolsonaro met with several ministers, where the departure of Roberto Castello Branco from the company’s presidency would have been decided;
  • A few hours later, in a live broadcast, Bolsonaro himself said that “measures to reduce fuel prices” would have been discussed at that meeting;
  • The operator may have yielded around BRL 18 million, a volume never before registered on the São Paulo stock exchange in cases like this.

The association representing minority investors in Brazil, Abradin, will file a representation to the country’s Securities and Exchange Commission (CVM) on Wednesday asking for the investigation of an operator who allegedly made a suspicious move with the share of the state-owned Brazilian multinational petroleum industry Petrobras in the options market.

According to the entity’s president, economist Aurélio Valporto, the operation would have taken place between a meeting in Brasilia in which the president of Petrobras, Roberto Castello Branco, would have been defined, and the appointment of general Joaquim Silva and Luna to take over the company.

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An operator bought a significant volume of options from the oil company betting on the fall of the state-owned company’s shares, as reported firsthand by journalist Malu Gaspar, a columnist for O Globo. According to Gaspar, on February 18, President Jair Bolsonaro met with ministers Bento Albuquerque, of Mines and Energy, Paulo Guedes, of Economy, Tarcísio Freitas, of Infrastructure, in addition to Luiz Eduardo Ramos, responsible for political articulation, Walter Braga Netto, from the Chief of Staff cabinet, and Augusto Heleno, Bolsonaro’s national security advisor. A few hours later, in a live broadcast, Bolsonaro himself said that “measures to reduce fuel prices” would have been discussed at that meeting.

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The operator may have yielded around BRL 18 million, a volume never before registered on the Brazilian stock exchange, B3, in cases like this. “It is already very clear that there was a crime, and there is evidence about it. Society and the judiciary need to understand that this is theft. They are people winning, and if there is no punishment, the credibility of the market is undermined, and we will never have a proper funding source for the country, ” Valporto told Reuters.

“The operation with the option had everything to turn to dust, but whoever did it – to buy 4 million options – knew that the company’s shares would fall even more. There is no doubt that there was a leak about the change in Petrobras’ leadership, an ‘insider trading.'”

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Petrobras’ preferred stock, which was down 4% in the middle of Wednesday afternoon, have declined 22.7% since February 19.

A request for a CVM’s investigation is a first step in elucidating the case. Abradin’s expectation is that the case will be investigated and forwarded to the Office of the Public Prosecutor for a future offer of complaint against the perpetrator of the operation.

Contacted about the operation with Petrobras’ options, CVM reported that “it monitors and analyzes information and transactions involving publicly-held companies, taking the appropriate measures whenever necessary.” The autarchy also said that “it does not comment on specific cases.” B3 informed Reuters that it will not manifest itself either.

Translated and co-written by LABS

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