The Stock Market Regulator, CMVM, is investigating massive insider trading in Banco Espírito Santo shares in the days before the bank went bust in August 2014.
A description of the great BES share sell-off by those in the know is contained in the regulator’s annual report which states that it is still investigating illegal insider trading activities triggering the ditching of shares by large investors to the detriment of smaller, individual shareholders.
Information was leaked from the bank, run then by Ricardo Salgado, that should have been top secret but enabled selected ‘big names’ to avoid huge losses.
CMVM already has investigated more than 80 investors who sold off their shares and BES bonds just before the bank went under and was split into the ‘good bank – bad bank’ resolution by the bank of Portugal.
There is proof of leaked information and the regulator explains in its annual report that its research involved the cooperation of those government authorities which were involved in the decision to finish off Banco Espírito Santo, primarily Carlos Costa's Bank of Portugal but also the Ministry of Finance under Maria Luís Albuquerque and the Directorate-General for Competition at the European Commission.
Analysis by the CMVM has identified 35 institutional investors, such as asset management companies and international funds, which made very significant sales in the lead up to the BES collapse. Some of them also were major shareholders as well as acting for clients.
As for big private investors, 48 have been investigated and in some cases the CMVM has asked the judicial authorities to gain access to shareholder emails.
The CMVM said that at the end of 2015 it had confirmed that information about the BES resolution measures had been leaked, it needs now to confirm how this inside information was gained and when its investigations are completed, criminal charges almost inevitably will be brought.
It has been obvious since 2014 that small shareholders were hung out to dry and that big institutional investors were given the nod that it was a good time to sell of their BES related investments.
Whether this information leak came from the office of Ricardo Salgado or lower down the food chain, the result may be a class action from smaller investors who were placed at a huge disadvantage at the time of 'the great BES share sell-off.'
