Brazilian regulator launches new probe into Batista

Brazil’s securities and exchange commission, CVM, has launched a new formal probe into the business dealings of Eike Batista and executives at OGX, as the onetime billionaire’s flagship oil company heads toward bankruptcy.

The commission, reports O Globo (in Portuguese), is investigating whether Batista and five other executives of the petroleum firm broke market rules regulating the disclosure of information.

The inquiry, the second formal one by CVM involving Batista this year, could lead to fines as well as bans.

Angry investors are threatening with lawsuits against the former billionaire. They have even called on Brazil’s authorities for tougher action, as they accuse Batista of insider trading.

They base their claims on the fact that Brazil’s former richest man sold 56m of his OGX shares a few days before the company announced it was suspending development of its only three producing oil wells.

Under Brazil’s regulations, management must release any information that could influence a firm’s share price, as well as disclose their personal ownership stakes in the company.

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Batista's wealth, estimated only last year at more than $30 billion, has shrunk to a net $200 million, according to the Bloomberg Billionaires Index.

The tycoon, who owns five public companies, famously said in 2008 – when his fortune was put at $6.6 billion, ranking him at No. 142 on the Forbes list – that his goal was to become the richest man in the world in five years.

Fast-forward to 2013 and the one time international icon of Brazil’s economic strength is struggling to recover investors’ trust in his shrinking business empire.