This week, we cover the fraud accusations against brokerage firm XP Inc. The military deal signed by Jair Bolsonaro and Trump. And how Covid-19 will hold back Brazilian IPOs.
Accused of foul play, XP Inc. faces class action
Stocks of brokerage firm XP Inc. on Nasdaq dipped 13 percent following the publication of a report by The Winkler Group, an investment consultancy. It announces its short-selling position on XP due to “accounting irregularities, inadequate financial disclosures, and discrepancies between the company’s IPO prospectus and internal audits.”
Why it matters. This could be the start of a very expensive legal battle for XP, just three months after its splashy initial public offering. Soon after the report went public, two high-profile investors’ rights law firms (Block & Leviton and The Rosen Law Firm) have announced investigations into XP for a possible class action, asking investors to contact their offices.
Accusations. The report raised serious questions about the brokerage firm’s financials:
- XP’s assets would be overstated by USD 44 million;
- An internal audit would have revealed a BRL 167-million discrepancy between the annual revenue reported in one audit, against the following year’s audit of its core asset;
- The report claims XP fired...