Off The Wire
UPDATE 1-Brazil securities watchdog probes JBS currency, stock purchases
(Recasts with CVM confirmation, JBS statement)
SAO PAULO, May 19 (Reuters) - Brazil's securities regulator on Friday said it launched two probes against meatpacker JBS SA this week to investigate suspicious trades made before the shocking revelation of a plea deal by the company's top executives.
CVM declined to give details on the probes but said they were opened on Wednesday and Thursday, after leaked details of the plea testimony accusing President Michel Temer of taking millions in bribes led to the biggest currency losses in nearly two decades.
The Batista brothers, controlling shareholders in JBS, claim Temer received 15 million reais ($4.6 million) in bribes from the world's largest meat processor. Temer has denied any wrongdoing and on Thursday refused to resign. The real fell 8 percent against the U.S. currency on Thursday, posting the highest losses since the country devalued its currency in 1999. The real pared losses on Friday, gaining 3 percent against the dollar.
Newspaper Valor Economico, citing an unnamed source, said CVM had been informed that companies owned by the Batista brothers bought over $1 billion in U.S. dollar contracts in the local market hours before the plea deal news broke.
Such a currency trade would have been done through various broker dealers, at the request of JBS, according to Valor.
JBS said in a statement on Friday any trades made this week were consistent with the company's strategy to hedge its large dollar-denominated debt. The company said the recent currency swings could have caused more than 1 billion reais in losses.
The regulator is also examining the sale of shares in the company by its controlling shareholders, Valor said.
Reuters earlier reported that the controlling shareholders had sold shares in JBS worth 329 million reais ($98 million) in April, after the secret plea deal talks had gotten underway. During the same period, JBS's treasury, which had not owned shares during the previous year, acquired around 200 million reais in stock. (Reporting by Tatiana Bautzer and Alberto Alerigi Jr.; Writing by Ana Mano and Silvio Cascione; Editing by Christian Plumb, Miral Fahmy and Diane Craft)