Brazil’s Securities Regulator to Propose Increase in Sanctions

Brazil’s securities regulator is seeking to increase sanctions for capital-markets crimes that were set more than a decade ago.

Officials are reviewing the current rules and will send proposals for changes to the Finance Ministry, according to Leonardo Pereira, the president of the agency known as the CVM. The maximum fine for illegally using inside information, set in 1999, is 500,000 reais ($190,500).

“Our role is not of an avenger, but to provide protection for investors,” Pereira said in an interview at his office in Sao Paulo. “Sanctions should discourage people from committing illegal acts. That’s a priority for us.”

The push to bolster penalties comes as former billionaire Eike Batista stands trial for allegedly selling shares in his oil company based on privileged information and as state-controlled oil company Petroleo Brasileiro SA becomes embroiled in the country’s biggest-ever bribery probe. Of the 57 cases of insider trading ruled on by regulator CVM from 2006 to 2013, all but seven involved fines of less than $160,000.

Batista could be the first person imprisoned in Brazil for using insider information since the activity was made illegal 13 years ago. Prosecutors have filed charges against Batista, who lost most of his $34.5 billion fortune when his energy and commodities empire collapsed, for illegally dumping shares of his oil company that tumbled 95 percent in 2013 before it filed for bankruptcy protection. Batista has denied any wrongdoing.

Prosecutors are separately investigating whether Petroleo Brasileiro demanded bribes in return for contracts awarded to construction companies. The CVM said Dec. 30 that it was probing whether the company’s managers violated their fiduciary duty. The company has said it’s cooperating with investigators.

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