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RIO DE JANEIRO, Brazil (AP) -- Lebanese-born investor Naji Nahas is suing Brazil's two largest stock exchanges for 10 billion reals (US$5.6 billion; euro3.9 billion), claiming they unjustly interfered with his banks and sold shares without authorization, his lawyer said Wednesday. The lawsuit comes just as the Sao Paulo Stock Exchange, Bovespa, prepares to go public with an initial public offering planned for November. Nahas' lawyer, Sergio Tostes, said his client is seeking to recover the value of his stock portfolio, adjusted for current market prices. In the suit, Nahas accuses Eduardo da Rocha Azevedo, who was the president of Bovespa at the time, of pressuring banks to cut his financing, forcing a chain reaction that triggered a stock crash. Rocha Azevedo told the magazine Exame that Nahas' accusations were baseless. Najas also accuses the Rio de Janeiro Stock Exchange of selling shares it was holding for him without his permission after the markets had dropped by as much as 40 percent, Tostes said. A spokeswoman for Bovespa said the exchange would not comment on the suit. The Rio de Janeiro exchange did not immediately respond to requests for comment. Tostes said Najas' suit come nearly 20 years after the fact because his client was only recently cleared of the criminal charges he faced in relation to the crash An appeals court recently threw out a 1997 conviction in which Nahas was sentenced to 25 years in prison for a scheme that involved buying stock on the futures market at a fixed price and borrowing money to buy more of the same shares on the stock exchange. He would then trade the shares among associates, driving the stock up, taking advantage of a law that allowed buyers five days to pay. The bank loans paid the difference as the stock price rose until the futures market matured and everyone cashed out. It was technically legal and worked as long as the loans kept coming in. But when the banks balked at lending more money. Nahas defaulted. Six brokerages failed immediately, and the Rio exchange suspended operations. Paulo Aragao, a lawyer handling the Bovespa IPO questioned the timing of the lawsuit. "The moment he chose to do this, after almost 20 years, shows his objective isn't very legitimate," Aragao told Exame. Tostes denied that Nahas' suit had been timed to interfere with Bovespa's IPO offering. "It's the other way around, Bovespa is rushing the IPO offering to have it out before it gets slapped with this suit," he said.
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