Credit Suisse settles Brazilian insider trading case

Credit Suisse International has offered to pay R$19.2m to Brazil’s securities commission to end an action over alleged insider dealing in shares of Embraer, the Brazilian aircraft manufacturer.

The commission, known as the CVM, said it accepted the offer form Credit Suisse on Tuesday having rejected an offer of R$150,000 last year. It said Tuesday’s offer was appropriate for the gravity of the offence and for the value of the suspect trades and because Credit Suisse presented its defence at the last possible moment.

Credit Suisse declined to comment.

The alleged insider trading took place between October 2005 and January 2006, when Embraer was preparing a capital restructuring that resulted in its shares being traded on the Novo Mercado, a listings segment on the São Paulo Stock Exchange that demands higher standards of corporate governance than required by law and has proved highly attractive to local and foreign investors.

The CVM said Sistel, a pension fund for employees of telecommunications companies that was one of Embraer’s controlling shareholders, had hired Credit Suisse to analyse the proposed restructuring. Shortly after it was hired, Credit Suisse allegedly began buying Embraer’s shares.

Embraer’s head of investor relations paid R$100,000 to the CVM in September 2008 to end proceedings over his alleged role in the affair. Two other Embraer employees were absolved.

The payment is the second biggest of its kind ever made because of a CVM investigation. In 2007, Banco Safra paid R$1.5m to the CVM and R$28m to investors following accusations of improper dealing by an investment fund.

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