World Bulletin / News Desk

A Rio de Janeiro court has frozen financial assets belonging to Brazilian tycoon Eike Batista up to a value of R$1.5 billion ($640 million) following charges of insider trading.

It is the latest development in an extraordinary fall from grace for Batista, who was once Brazil's richest man. The judge ordered Batista’s bank accounts frozen but has so far not seized other assets, such as properties, cars, and boats, or property that Batista has transferred to his children.

"The amount is equivalent to the damage sustained by the stock market as a result of criminal conduct led by the denounced,” said prosecutors Rodrigo Ramos Poerson and Orlando Monteiro da Cunha.

Batista is being investigated for insider trading and market manipulation. The market manipulation charges stem from a disagreement over a $1 billion “put” option in a contract between Batista and his oil and gas company OGX, under which he promised to buy $1 billion of new shares in the company at a time of OGX’s choosing. Batista later refused to honor the option.

Prosecutors argued that promising to pay the $1 billion, but then refusing to do so, was an act of "bad faith and fraud,” which had given the market undue faith in OGX and suggested that Batista already knew that its oilfields would not be productive enough to justify the high prices of its shares at the time the deal was made.

Sérgio Bermudes, Batista’s lawyer, could not be reached.

Prosecutors also claim Batista used insider knowledge of OGX to sell shares shortly before they lost significant value. During May and June 2013, Batista sold off 126.7 million shares in OGX. The move came just weeks before the company announced it would suspend oil and gas production at its flagship Campos basin oil field from 2014 and was breaking contracts with its former sister company, shipbuilder OSX, to build production units.

OGX had been losing value and struggling since reporting oil production that was much lower than expected in June 2012 and the company eventually filed for bankruptcy protection in October 2013. It has since changed its name to OGPar.

Batista was at one point Brazil’s richest man with a fortune estimated at $30 billion. In 2012, he was 7th on the Forbes list of billionaries, dropping to number 100 in 2013. A college dropout, he made his fortune early, buying and reselling gold from mines in the Amazon.

As demand for commodities soared, the value of his mining, shipping and oil production conglomerate, EBX, made him a billionaire. But the empire fell apart after the underperformance of OGX sent shockwaves throughout the group.