LONDON André Esteves, the billionaire shareholder of Brazilian investment bank BTG Pactual, is under investigation in Europe for trades he made in his personal account in 2007, the prospectus for the bank's planned listing shows.
Esteves, who is chief executive, chairman and owns about 24 percent of BTG Pactual, at the time was employed by UBS UBSN.VX, where he worked after he sold Pactual to the Swiss bank for $3.1 billion in May 2006.
"Our controlling shareholder is a subject of an ongoing civil, non-criminal investigation in Europe in connection with certain trades in the securities of a European market issuer made by him in his personal capacity in 2007," the BTG Pactual prospectus said.
"Our controlling shareholder believes that the allegations are without merit, and currently intends to appeal a finding (if any such finding occurs) against him in such matter."
Esteves, 43, rose through the ranks at BTG Pactual before he sold it to UBS. He bought the bank back for $2.5 billion in 2009, together with some other partners.
BTG Pactual and Esteves himself have become symbols of Brazil's growing economic might, competing head to head with global investment banks in a region with bustling capital markets and surging demand for wealth management services.
He has a net worth of about $3 billion and is Brazil's 13th richest individual, according to Forbes magazine's rich list.
BTG Pactual launched its initial public offering on April 3, and could raise 4.1 billion reais ($2.2 billion) from the deal.
It will be the first initial public offering by an investment bank based in Brazil, and raise the bank's profile and that of Esteves globally.
Based on an acquisition it made earlier in the year, BTG Pactual is worth $14.8 billion.
The prospectus said regardless of the outcome of the investigation, the bank did not believe there would be an adverse effect on BTG Pactual, including on Esteves's capacity to serve in his present role.
BTG Pactual declined to comment further than its statement in the prospectus. UBS declined to comment.
Esteves, a mathematician who started as a computer technician at Banco Pactual in 1989 at age 21, became a managing partner in 2002. After the UBS takeover, he worked in London and was appointed UBS's global head of the fixed income, currencies and commodities group in October 2007.
(Reporting by Steve Slater; Editing by Jon Loades-Carter and Helen Massy-Beresford)