BTG chief fined for insider trading

The chief executive, André Esteves, of BTG Pactual has been fined for insider trading by Italian regulators.

Story highlights

  • The chief executive, André Esteves, of BTG Pactual has been fined for insider trading
  • Esteves was banned from senior positions at Italian companies
  • The news marked a blow for the Rio de Janeiro-based bank

The chief executive of BTG Pactual has been fined for insider trading by Italian regulators in a move that has forced the rapidly growing Brazilian investment bank to amend the prospectus for its high-profile listing next week.

Consob, the Italian financial watchdog, imposed a €350,000 fine and a six-month ban from senior positions at Italian companies on André Esteves for a purchase of shares worth €3.4m in beef producer Cremonini five years ago.

The news marked a blow for the Rio de Janeiro-based bank just as it is gearing up for a public offering next week that values it at up to $15bn, making it the first significant IPO in Brazil in more than nine months.

BTG Pactual said Mr Esteves was informed on April 13 of the result of the Consob investigation and had decided to appeal.

"This decision is still subject to appeal in the administrative domain and, by its nature, does not include any consequences in the criminal domain," the investment bank said.

Italy's Consob, which in February ordered the seizure of €4.2m of Mr Esteves' assets, said the 43-year-old Latin American banker bought the shares in November 2007 knowing that the group was planning to enter a joint venture with Brazilian rival JBS.

The joint venture was announced in December 2007 but has since collapsed amid acrimony between the two companies.

The bank had mentioned "ongoing civil, non-criminal investigation in Europe" against Mr Esteves in its IPO prospectus published at the beginning of the month, without providing any detail at the time.

In that prospectus, the bank said that regardless of the investigation's outcome, it did not believe there would be an adverse effect on BTG Pactual, including on the capacity of Mr Esteves to serve in his present roles.

In 2007, Mr Esteves, who ranks as Brazil's 13th-richest individual, was employed by UBS where he worked as global head of fixed income after selling BTG Pactual to the Swiss bank for $2.5bn when he was just 37 years old.

Mr Esteves bought BTG Pactual back from UBS in 2009 after the onset of the financial crisis, selling a stake in the firm the following year to three sovereign wealth funds that valued it at about $10bn.

BTG Pactual declined to comment on the Consob fine. But people close to Latin America's largest independent investment bank said the fine affected neither the bank nor the IPO.

"This is a bit embarrassing but it is irrelevant and essentially without merit," one person said.

The planned flotation on April 26 will value Mr Esteves's stake at up to $5bn and will show that 35 other senior partners own stakes worth more than $150m each.

But Mr Esteves and his partners will not use the IPO to cash out of the company. After the listing, the partners will only trade shares among themselves and not sell them on the public market.

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