Portugal’s Public Prosecution service finally has accused a Bank of Portugal employee of insider trading at the time of the collapse of Banco Espírito Santo (BES) over three years ago.
The unnamed employee sold all his BES shares two days before the bank's collapse and its resolution on August 3, 2014.
The Public Prosecutor has accused the employee with the misuse of privileged information as he knew that the resolution plan about to put in place would render his shares worthless.
According to the Lisbon District Attorney's Office, that Bank of Portugal official had acquired shares in BES and, when he knew what lay in store for BES shareholders, "concluded that BES shares would suffer a sharp devaluation, so that, on the morning of August 1, 2014, he sold all his shares in the bank.” This allowed the employee to avoid suffering a total loss on his investment.
The resolution for BES was announced by the governor of the Bank of Portugal, Carlos Costa, at the end of Sunday, August 3, 2014, at a press conference that was covered by television channels.
The employee sold his shares on the last day that they could have been traded.
The long-running investigation has been conducted by the Department of Investigation and Action in Lisbon, with the assistance of the Judicial Police.
It is not yet know why this case has taken so long to come to court but with such a backlog, it may be that the judicial system is to blame rather than any slackness from those investigating the offence.
One question remains - why are Bank of Portugal employees allowed to trade in the shares of Portugal's high street banks? As the regulatory body, Bank of Portugal staff and directors will be privy to information that, when released, often will affect share prices.
