Glencore stock weakens as U.S. probes "corrupt practices"


Glencore shares fall as U.S. probes 'corrupt practices'

By Muvija M

April 26 (Reuters) - Glencore shares fell nearly four percent on Friday after news overnight U.S. regulators were investigating whether the miner broke rules through "corrupt practices".

Shares of the FTSE 100 company, which have lagged other mining heavyweights this year, were down 3.6 percent at 310.05 pence by 1155 GMT.

"The CFTC investigation just reminds the market of the outstanding investigation once more and to have two sets of eyes on you must be uncomfortable," Grant Sporre, an associate director at Macquarie said.

Glencore, among the world's largest global diversified miners, said the investigations were of a similar scope in terms of subject matter as the ongoing investigation by the U.S. Department of Justice.

Last July, U.S. authorities demanded Glencore hand over documents about its business in the Democratic Republic of Congo, Venezuela and Nigeria as part of a corruption probe.

Sporre said it was unlikely to be a double penalty in terms of a sanction. Credit Suisse analysts said any CFTC fine could be "in the $10 millions".

"Until the impact of regulatory risks on potential liabilities, plus Glencore's business model, can be quantified, it remains difficult to assess Glencore's investment proposition," JP Morgan analysts wrote, maintaining their "Neutral" rating.

At least six brokerages, including J.P. Morgan and Goldman Sachs, have downgraded the stock after news of the U.S. DoJ subpoena emerged.

RBC analysts said the link between the DoJ investigation and that of the CFTC suggested it was likely an extension of the first probe.

"This will not help the recently recovering sentiment from investors around Glencore shares but we are not sure that this extension, other than potentially expanded scope, really changes anything," they wrote.

Glencore, which produces more than 90 commodities, is scheduled to issue a first-quarter update next week.

This article appears in: Stocks , Technology , Oil , Commodities

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