Brazil's federal police agency is focusing on activity that occurred between April and May this year. 
SÃO PAULO, Brazil – The Federal Police in Brazil launched a raid on the offices of JBS SA, the world’s largest meat packer, and holding company FB Participações SA as part of an investigation into insider trading. The raid was coordinated with the Securities and Exchange Commission (CVM) in Brazil.

The 6th Federal Criminal Court of São Paulo issued three search and seizure warrants and four arrest warrants at the request of federal prosecutors. The investigation is focused on two transactions:

  1. the sale of shares issued by JBS SA on the stock exchange, by its parent company, FB Participações, at the end of April; and
  2. the purchase of futures contracts on the futures exchange and the dollar futures contract in the over-the-counter market between the end of April and mid-May 2017.

“There are indications that these transactions occurred with the use of inside information, generating undue advantages in the capital market” at time when almost all investors had financial losses, federal law enforcement authorities said in a statement.

The agency added that those found criminally liable face penalties of one to five years imprisonment and a fine three times the amount of consideration gained from the alleged insider trading. On May 30, another holding company controlled by the Batista family, J&F Participações, entered into a leniency agreement with federal prosecutors in the JBS SA bribery scandal. Terms of the agreement include payments made solely by J&F over 25 years to equal R$10.3 billion (US$3.18 billion) in it relation to the Bullish and Weak Flesh investigations, bribes paid by JBS to Brazil’s former and current presidents and meat inspectors along with questionable loans made to JBS by the National Economic and Social Development Bank (BNDES) through its subsidiary BNDESPAR.

The raid came just three days after the company agreed to sell its beef operations in Argentina, Paraguay and Uruguay to companies controlled by Minerva SA.  Pul Argentina SA, Frigomerc SA and Pulsa SA bought the assets for a total of $300 million. JBS said proceeds from the sale would be used “to reduce its financial leverage.”