Brazil Aims to Put Eike Batista Behind Bars

Less than three years after President Dilma Rousseff dubbed Eike Batista “the pride of Brazil,” prosecutors are trying to send the former billionaire to prison for alleged insider trading in a trial set for later this month. If they succeed, Batista will be the first person in the nation to serve time for that crime in the 13 years since such activity was outlawed.

“Insider trading is clearly widespread in Brazil,” says David Riedel, president of Riedel Equity Research in Greenbrae, Calif. “There is a consistent pattern of leaking. But the problem is not the laws—it’s that they aren’t enforced.” Of the 11 biggest mergers and acquisitions in Brazil in the past two years, at least seven of them were reported by newspapers and news agencies before the official announcement was made, according to data compiled by Bloomberg News. The stock of real estate developer Brookfield Incorporações skyrocketed 21 percent on Jan. 23 on rumors its parent company would take the unit private. That deal was announced four days later.