Reuters | Tue Jul 13, 2010 | 7:09pm IST
Brazil’s federal police are investigating Goldman Sachs Group Inc. for the alleged use of insider information in the takeover of pulp company Ripasa by rival Suzano Celulose in 2004, Brazilian newspaper Valor Economico reported on Tuesday. Goldman, the most profitable securities firm in Wall Street history, advised some of the families selling their stakes in Ripasa, Valor said. The case could be examined in civil court, it said, without elaborating. Currently, Brazilian courts are investigating two insider trading cases, Valor reported. Goldman declined to comment on the Valor story.
Suzano and rival VCP — today part of Fibria — bought all shares of Ripasa in late 2004. The police say Goldman traders sold Suzano shares between September and October 2004 before the disclosure of the Ripasa deal in November of that year, Valor reported. This allowed Goldman to avoid about $141,000 in trading losses, the newspaper said. Often the stock price of an acquiring company falls when a takeover is announced. The federal police declined to comment on the Valor story. Suzano said through a spokeswoman that it would not comment on the report.
According to Valor, Goldman told the police that its investment banking and trading units acted separately in the Suzano-Ripasa situation. The probe comes as Brazilian authorities, led by securities regulator CVM, are tightening controls on investment banks and investors to reduce offences related to insider trading. Ten of 12 executives and bankers probed by the CVM in the Suzano-Ripasa case have agreed to settle, Valor reported.