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If the police probe leads to criminal charges against Batista, it would be yet another major blow for a businessman once hailed as Brazil's model entrepreneur and symbol of its economic success.
Batista´s EBX oil, mining and logistics empire, which two years ago was valued at $60 billion, collapsed last year in a mountain of debt and massive filings for bankruptcy protection.
A week ago, Brazil's securities commission, CVM, announced that Batista was under investigation for insider trading as chairman of his now-bankrupt oil-producing company Óleo and Gás Participações SA (>> Oleo e Gas Participacoes SA), formerly known as OGX, and its sister company, shipbuilder OSX Brasil SA (>> OSX BRASIL SA).
Batista is now being investigated by the police at the request of federal prosecutors in Rio de Janeiro for financial crimes involving the allegedly illegal sales of shares before his conglomerate fell apart, O Globo newspaper reported.
The police probe will focus on the sale of shares last year in oil producer OGX before the company informed the market that much of its reserves were not commercially viable, Folha de S. Paulo newspaper said.
The Federal Police would not comment.
A spokeswoman for Batista said his EBX group had not been officially notified by federal prosecutors or police and would provide the authorities with explanations in due course.
"Everything will be cleared up and Eike Batista's good faith will be proven," his lawyer Darwin Corrêa said.
Batista, Brazil's richest man for most of the past decade, could face up to 23 years in prison if convicted.
Securities watchdog CVM wants to determine whether Batista withheld information that was unfavorable to some of his businesses while encouraging investors to buy more stock in his companies at a time when he sold shares of OGX and OSX.
Among other probes, the regulator will look into whether Batista used his Twitter account to manipulate OGX share prices while hiding the company's problems.
(Reporting by Anthony Boadle; Editing by Leslie Adler)
