Argentina accuses JPMorgan, Clarin of share fraud

Argentina has filed a criminal complaint against JPMorgan and Grupo Clarin, the country's biggest media conglomerate, accusing them of committing fraud by manipulating Clarin's share price, an official said on Thursday.

The complaint by the state UIF financial information unit says JPMorgan (JPM.N) and Grupo Clarin (CLA.BA) (GCSAq.L) withheld information to inflate the price of Clarin's shares when the media group went public in 2007.

"It was a partnership by which JPMorgan ... arranged the sale of these shares to the only ones who were available -- the pension funds," UIF Director Jose Sbatella told local radio.

The accusations are the latest twist in a two-year battle between the government and Clarin, which the UIF accuses of knowingly selling its overvalued shares to the country's pension funds.

Sbatella said the shares were first sold at 30 pesos each, or roughly $9.70 at the 2007 exchange rate, and later plummeted to 6 pesos.

Clarin "didn't give the market true and precise information, which is key to setting stock prices," Sbatella said in the complaint, cited by La Nacion newspaper.

JPMorgan, which the government accuses of managing the alleged share deal, said the accusations lacked validity.

"We have not seen any charges as yet, but we are confident that charges based on allegations by Hernan Arbizu are baseless," said JPMorgan spokesman Darin Oduyoye, referring to a former JPMorgan private banking executive arrested two years ago in Argentina.

Arbizu, who is accused of stealing $2.8 million from a customer's account, began collaborating with authorities earlier this year in the complaint involving Clarin and his former employer.

Clarin representatives were not immediately available for comment, but a source at the media group was quoted as telling La Nacion: "The UIF is being used for political gain."

Argentine President Cristina Fernandez and her husband and predecessor, former president Nestor Kirchner, have been in an ugly battle with Clarin since the media group criticized their confrontation with farmers over soy export taxes in 2008.

Clarin often says it is being harassed while Fernandez accuses the company of conspiring against her government.

The UIF presented similar charges against Banco Patagonia (BPAT.BA) and Consultatio SA, an asset management group, and ordered an investigation into sales of their shares to the private AFJP pension funds that were nationalized in 2008.

"These accusations are completely baseless," Consultatio President Eduardo Costantini told Reuters. "Our share placements were transparent and followed the laws."

Banco Patagonia declined to comment.

[Source: By Luis Andres Henao, Reuters, Bs As, 08Jul10]

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