Larrain Vial SA, Citigroup Inc. and Banco de Chile, as well as executives including Larrain Vial chairman Leonidas Vial, were accused by Chilean securities regulators of fraudulent trading.
The charges relate to trades in fertilizer producer Soc. Quimica y Minera de Chile SA and holding companies controlled by Julio Ponce. Ponce has already been charged with buying shares in the holding companies at below market prices and selling them back at inflated prices between 2009 and 2011. Ponce has denied any wrongdoing.
Leonidas Vial is vice chairman of the Santiago stock exchange and director of companies including electric utility Enersis SA. He is accused of using investment companies to take part in a fraudulent trading system routed through Larrain Vial’s brokerage unit. The chief executive officer and head of institutional sales at the brokerage, Manuel Bulnes and Felipe Errazuriz, also breached securities rules through “fictitious trades” in Ponce’s holding companies, regulators said.
“The charges against Larrain Vial and two of its executives gives us the chance to defend the total innocence of the company and the executives,” the brokerage’s lawyers, Cariola, Diez, Perez-Cotapos & Cia., said in a statement today.
Banchile said its lawyers are studying the charges with a view to preparing a defense that will show it acted correctly. Banchile was the biggest broker on the Santiago stock exchange in January.
Larrain Vial lost its position as Chile’s largest share trader in December, three months after it was cited in documents charging Ponce with breaching trading rules.
Cristian Araya, another of the accused, today resigned as chairman of Tanner Corredores de Bolsa SA, the brokerage said. He was previously head of investments at Banchile Corredores de Bolsa SA, which is accused of fraudulent trading along with Araya.
Citigroup Global Markets Inc. and its legal representative Fabio Gheilerman face the same charges, as does Linzor Asset Management, which has changed its name to CHL Asset Management Chile, and its legal representative Canio Corbo.
All the accused have as many as 20 working days to respond, the securities regulator said in a statement on its website.
Anthony Ingham, a press official at Citigroup in Miami, said in an e-mail that the company “always cooperates with authorities and regulators whenever we are legally required to do so.”
Araya wasn’t available for comment according to a colleague contacted by telephone. Gheilerman and Corbo didn’t immediately return calls seeking comment.