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At Least We're Not Brazil

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If you think insider trading in the U.S. is bad, where 41% of deals show signs of "suspicious" pre-announcement trading, take a look at some other countries. The Dutch are just as dodgy, Deal Journal reports. Dutch authorities are looking into the 11% spike in Numico shares before the announcement of a $17 billion bid for the company and the NYSE is investigating trading of ABN Amro share before the announcement of Barclay's bid.
One of the worst industrialized nations in terms of insider trading is Brazil. A Bloomberg expose on the Brazilian market reports that nearly every one of the 145 M&A deals in Brazil this year leaked early and showed signs of rampant insider trading. We're not talking subtle share price bumps but massive spikes like the 550% surge in the price of Tele Norte Leste Participacoes SA before an April 10 buyout announcement. This hasn't exactly created a crises of confidence, as the Bovespa benchmark index in Brazil has climbed 189% (in dollar terms) in the past 2 years, helped along by the slowest inflation in a decade. At least the incredibly corrupt old boys in the system are finally making real relative gains.
If you thought the SEC was toothless, it's a virtual piranha compared to the gummy geriatric nibbles of enforcement provided by the Comissao de Valores Mobiliarios (the Brazilian SEC), run by Macelo Trindade. In theory insider trading is a crime in Brazil, carrying a penalty of one to five years in prison (and we're taking one to five in Brazilian prison years), but no one has ever been sent to jail for it. Prison sentences for illegal trading have been issued in the country, but get overturned on appeal (and upheld by the Brazilian Supreme Court), like the famous Naji Nahas case in 1994.
The only people in finance we know in Brazil, Merrill Lynch banker Renato Malzoni and his girlfriend Daniela Cicarelli (pictured above), could not be reached for comment. (By popular demand, we've reduced her picture to a headshot. Click on the picture for a larger image of Cicarelli in beachwear.)
Insider Trading Goes Global [Deal Journal]
Insider Trading Infects Brazil Stocks as Almost All Deals Leak [Bloomberg]