SAO PAULO Brazil's securities regulator has launched an administrative probe into a top executive at jetmaker Embraer SA regarding an announcement about its proposed joint venture with Boeing (NYSE:BA) Co, newspaper Valor Econômico reported on Monday.
The investigation of Nelson Krahenbuhl Salgado, the chief financial officer and investor relations director, will seek to establish whether Embraer disclosed incomplete information about the degree of influence over the joint venture in which it will own a 20 percent stake, according to the paper.
A CVM spokeswoman confirmed the existence of the probe and said the next step involves Salgado presenting his defense.
Embraer told Reuters in an emailed statement it has been regularly informing the market of all developments related to the joint venture and that it is open to answering any questions from market authorities.
In a filing in July laying out the basic terms of the agreement to form the joint venture, Embraer disclosed it had signed a preliminary, nonbinding memorandum of understanding (MOU) with Boeing, the newspaper reported.
"From our perspective, given the way it was communicated, the disclosure sought to diminish the importance of the fact that Embraer will have very limited means to influence operation of the NewCo," Raquel de Campos, a federal prosecutor who works for regulator CVM, was cited as saying in Valor.
The regulator did not find information in the filing that contradicts the MOU,Valor reported. But the filing allegedly only provides generic information regarding governance and veto rights to be retained by Embraer in the new company, Valor reported.
Campos was also quoted as saying CVM is not judging the merits of the transaction, but ensuring it is fairly communicated to investors in the market.
CVM made public remarks about the administrative probe, which started in November, in a class action filed by a group of minority shareholders over the terms of the agreement to form the joint venture, Valor said.