Pedro Menin writes that trading in the company’s shares suggests the possibility of “insider trading”.
On January 11, 2023, Americanas disclosed a material fact that informed the market that it had identified an accounting mismatch of R$20 billion. As if that wasn’t enough, they also announced the resignation of important managers of the company, including Sergio Real, the CEO who took over less than 10 days ago and who is seen as one of the big bets on the turning point of the century-old retailer. .
Without much understanding or time to process what was happening, over 150,000 shareholders saw their investment drop by 80% in the next trading session. It was an amazing hit. Waiting for new information, thousands of company employees, suppliers and partners were also upset.
We may have witnessed the largest institutional fraud in the history of the Brazilian capital market. BTG Pactual, one of Americana’s largest creditors, has defined the case as ‘A sad example for a country’. The issue reverberated even at the World Economic Forum, in Davos, where Haddad promised ECM responses to the community.
As soon as the news broke, I posted a thread on Twitter with proof of Insider trading Overnight, the post garnered more than 600,000 views, making it probably the most read comment about the case on the internet. On the same day, the Wrongdoing Investigation Mechanism and the MPF opened investigations to investigate the wrongdoing.
Some evidence was the recent sudden increase in share rents – when an investor bets on the fall of an asset – and the abnormal trading of derivatives on the eve of the news and the sale of a large amount of shares by the board of directors in the second half of the year 2022, precisely when the new CEO was announced Sergio Real.
I took the opportunity, in an effort to bring more market transparency, to detail how and where I looked for this information. It is important to note that only the CVM and MPF can determine, at the end of already initiated processes, whether there has been fraud and, if so, who will be responsible for the fraud. My role here is not to condemn anyone.
The entire episode was seen as very strange, for several reasons:
- Oddly enough, the discovery was so quick, the new CEO has been in office for less than 10 days; It is likely that the problem was already known;
- Information mismatch and lack of clarity in Report, who speaks in immaterial contradiction; However, the company had already requested an injunction to examine an application from RJ, with debts of around R$40 billion;
- the communicate It was closed by Rial with BTG, the company’s creditor, explaining the situation, and showing signs that the problem was already known;
- The information that the CEO, who has just left office, has become an advisor to major shareholders to handle the issue.
Of all the assumptions posted to my personal Twitter page after the episode, undoubtedly the one that caught the attention of the market and the media was the sales the board made months before the bomb exploded. To explain how you arrived at these transactions, we will discuss together throughout the article:
- How can the Report Transactions between related parties and who they are;
- What dictate America’s domestic politics on this subject?
- a larger history of these transactions;
- New news posted over the past few days, following my Mail.
Beginning: The CVM Instruction (Comissão de Valores Mobiliários) governing, among other things, the disclosure of transactions by related parties is CVM 44 (full – 1 MB). This topic was dealt with in Chapter Eight of the Resolution.
related spare partsor Public relationsThey are: members of the board of directors, managers, controllers, members of the technical and treasury bodies, their spouses, and others. When Public relations He trades securities, he needs to inform the company, which, in turn, must publish the information by the tenth of the following month.
Companies report negotiations to CVM and post them on their investor relations (IR) websites. They are reports in .pdf format, without much standardization and not as detailed as in the US.
There, if any director ever sells stock in your company, you know exactly who did. Here it is just announced “board”in a general way.
Until 2021, the resolution on the topic was 358. The resolution became 44, therefore, recently. However, the way you negotiate for Public relations reported relatively new; The consolidated date only starts to appear from 2019…before it was we will chaotic!
I am a co-founder of Quantzed, a company that specializes in analysis and data for the financial market. We capture, process and integrate all of these reports which are produced monthly. This is how I was able, through the Quantzed platform, to see paintings selling, rents rising, and abnormal trading in derivatives.
The reason for monitoring these negotiations is precisely to try to avoid situations like those that occurred with Americana. in Public relations She is, by definition, considered “The Insiders”, people from within the company, who live their daily lives. If anyone from the inside He only sells stocks, so why buy? At the very least, that should get your attention…
Having explained Resolution 44, let’s now turn to Americanas’ internal code dealing with stock trading policy, which is available on the company’s IR website (full – 1MB). This is how they define themselves as a concept “secret information”:
for such a policy “Its purpose is to establish high standards of conduct and transparency, to which the persons associated are obligatorily bound.”. in Public relations They must abide by the term, therefore, which is kept, and signed, at the headquarters of Americanas. The documents, due to their importance, must be kept for up to 5 years after the individual has left the company:
The third chapter says that it is obligatory Public relations Ensure the correct disclosure of information related to the company’s financial position and ownership rights. The fourth chapter, in turn, speaks of the duty of secrecy. Basically a Public relations The company’s securities may not be traded based on material information that has not yet been published.
You are Public relations They are also obligated to ensure that their subordinates also do not, Respond jointly and individually in case of non-compliance.
Now, let’s move on to transaction history and possible answers to a few questions.
After discovering the scandal and seeking injunctive relief for Americana, BTG, in petitioning against the injunction granted, stated that the case is “The biggest corporate scam” from the state. He accused the company of bad faith, pointing out that on the day of the market announcement they tried to recover the R$800 million invested in the bank.
Also on Wednesday afternoon, a series of negotiations “strange” They were conducted on the company’s stock and options. Many structures are sold in new options and contracts “short shorts” On the sheets are grouped, as I have already explained. This reinforces the hypothesis that there is bad faith and Insider trading.
What few people notice, and maybe that’s why thread The virus spread, is that the company’s managers have already done so many Sales at the end of last year.
So everyone asked:
- Do you already know?
- How long?
- Sold for this reason?
- Was there “insider trading”?
These answers cannot be pinned. The Risk Verification Mechanism (CVM) and MPF (MPF) have already initiated processes to investigate potential wrongdoing. The company also formed an independent committee to investigate the case.
But, getting straight to the point…
Did the reference shareholders – 3G, owned by Jorge Paulo Lehmann, Beto Secubira and Marcel Telles – also sell?
Were there also stock purchases since the beginning of the transaction history?
Yes, mainly from the “monitors” (3G) and the treasury.
Does this tend to rule out the possibility that 3G knew about the fraud?
Maybe… But only investigations will reveal.
Has the Board of Directors already sold shares on other occasions?
yes. In fact, throughout history.
They are “Abnormal” Sales at the end of last year?
History analysis, yes. Mainly because it was made around the time Real was revealed as the new CEO. Also because of the way they are made, at an accelerated pace, different from the pattern observed at other times.
It is possible to say with certainty that the board of directors or any other agent knew about the fraud and traded shares for this reason, and to commit an offense Insider trading?
Obviously not. Who would say that would be MPF and CVM, with established investigative processes.
Is there an aggravating factor if the board is in fact negotiating based on material undisclosed information?
In this specific case, yes. At least that’s what Americana’s domestic politics say. Read what was stated in the document about the possibility of the company submitting a judicial recovery:
Another controversial point raised is that the result inflated and accumulated over the years would have helped pay bonuses for results to the board, as set out in the bonus policy (full – 1MB), also available on the company’s IR website:
Thus, it is of course questionable whether there was willful fraud, and if so, who was aware of the exaggerated figures. It is also in the interest of the market to know how much management and others Public relations Received, willingly or not, unnecessarily.
Another very important point is that the company has ADRs (American depository receipts, or stock certificates traded abroad) listed in the United States. were traded under ribbon BTOOY, Level 1, and it is sold without a prescription. Level 1 requires the company to follow fewer SEC rules, North American CVMBut it is very likely that the company will be sued abroad as well…
This episode shows, in one way or another, how important it is to keep an eye on the negotiations you’re in Public relations in the companies you invest in. Look, try to understand the reasons and, if necessary, jump ship. Or join if the managers themselves raise their stakes… The important thing is that you have a well-established investment process and broad access to reliable data.
We can also take the opportunity to note and apply some necessary improvements in the Report Transactions with related parties. The market just tends to benefit from more transparency.
There are good practices that should be adopted, for example, those that are happening in the United States:
- Outside delay It wasn’t long between the negotiations and their release, it was only two days late;
- It is possible to know exactly who negotiated, and general terms were not used – this would save discussions and assumptions;
- You are filings very uniform.
As for the Americana case, it is impossible to know what will happen… I have no idea if the company will go bankrupt, if the stock goes down or up, what is the true extent of the damage done…
However, there is no doubt that the market’s credibility has been severely damaged. After all, are there other companies in a similar situation? Who says no?
In short, it is a tragic episode for the history and health of the market.
CVM and MPF need to provide a rigorous response to this episode, and take measures to ensure that nothing similar happens again. I have no doubt that the authorities will respond accordingly.
If you’ve invested in the company’s stock, directly or indirectly, and would like to talk about it, know that I’m also an investment advisor to Nova Futura, the largest independent brokerage in the country, and I’m available to help. I sympathize with those who have been affected by this tragic incident.