Venezuela arrests 4 executives in widening crackdown on brokerages, currency trading

4 brokerage executives arrested in Venezuela

CARACAS, Venezuela — Venezuelan authorities arrested four brokerage firm executives Thursday as part of a crackdown on a sector where President Hugo Chavez says widespread currency speculation is driving up inflation.

Pedro Castillo Torcat, general director of Positiva Sociedad de Corretaje; Jose Rivero, general director of BanValor; and Marcos Siervo and Eduardo Sacco, two executives from Venevalores, will all face trial, the Attorney General’s Office said in a statement. It did not elaborate.

In the past two weeks, pro-Chavez lawmakers have passed legislation letting the Central bank tighten control over the previously unregulated bond market. Authorities also halted bond trading for two weeks, and the government took over management at 31 of the country’s 107 brokerage companies.

Authorities have raided 15 other brokerages on suspicion of irregularities, including BBO Casa de Bolsa and Bencorp Casa de Bolsa on Thursday, the prosecutor’s office said in a statement.

Chavez is seeking to crack down on currency trading that he blames for soaring inflation and the Venezuelan bolivar’s declining value on the black market. The socialist leader has ordered authorities to investigate alleged illegal trading and money laundering.

Venezuela maintains strict currency controls and sets official exchange rates, but another route for trading currency has been the bond market, where the bolivar has recently fetched about 8.20 bolivars to the U.S. dollar — almost double the official rate of 4.30 to the dollar for nonessential goods.

Eduardo Fortuny, director of the Venezuelan Association of Brokerage Firms, said Wednesday that the government’s measures are forcing many brokerages to lay off employees as they struggle for survival.

Some 4,000 people are employed by Venezuela’s brokerage firms, he said.