The lawyer explains the penalties to be expected in the event of manipulation and insider trading; The sentence can be up to eight years
A week ago, Americana rocked the market by disclosing to investors “accounting inconsistencies” with about R$20 billion on its balance sheet. Investigations are still ongoing, but based on the violations investigated, it is possible to estimate the penalties provided for in the law.
In the event of fraud, the penalty can be up to eight years, explained attorney José Antonio Miguel Neto, co-founder of Miguel Neto Advogados. You understand:
Can Insider Trading Executives Be Arrested?
The Securities and Exchange Commission (CVM), the Financial Market Regulatory Authority, and the Federal Public Ministry of São Paulo (MPF-SP) are investigating the possibility of “insider trading,” which is when an investor uses privileged information to obtain gains.
According to José Antonio Miguel Neto, the penalties can be administrative, civil and criminal. At the managerial level, CVM can impose penalties and financial penalties that make it impossible for a director to be a director of the company (board member and director) for years. In addition, it can prevent you from doing business in general.
On a civil level, shareholders who have benefited from any privileged information may be required to pay fines that take into account the exact amount, in addition to being prevented from doing business and having to compensate the market for the damage caused.
From the criminal point of view, they can be sentenced in court to penalties ranging from 1 to 5 years of imprisonment and a fine of 3 times the amount of the unlawful advantage obtained, under the provisions of Article 27-d of Law No. 6,385 / 76. Miguel Neto points out that the penalties mentioned are cumulative.
What is the penalty for match-fixing?
José Antonio Miguel Neto states that the administrative and civil penalties are, in this case, the same as those previously mentioned, and may be applied to any and all company directors, external auditors and market agents who participated in a civil or willful manner in the manipulation of results.
On the criminal side, the lawyer explains that accounting fraud is characterized by manipulation or omission of transactions, fraud of accounting documents, records and data – based on the Brazilian accounting standard – NBC 11.
“In this case, the penalties can reach from 1 year to 8 years and the accountants who signed the financial statements can also be charged with ineligibility to practice the profession,” said Miguel Neto.
Can CEOs be sued by the company, employees or shareholders?
If their involvement is proven by action, negligence, fraud or negligence, executives can be sued by the company, shareholders, creditors, suppliers and employees harmed in any way, explains Miguel Neto. Executives are subject to the penalties set out above.
To date, there is no precedent for prison cases for offenses such as fraud, match-fixing and insider trading, known, among other things, as “white-collar offences”. Despite this, the lawyer sees the possibility of imprisonment: “More and more society is calling for this measure,” he said.
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