Brazilian reinsurer IRB rises as much as 17% with investors inspired by GameStop

SAO PAULO, Jan 28 (Reuters) - Brazilian reinsurer IRB Brasil Resseguros gained as much as 17% in mid-afternoon trading as some Brazilian retail investors mimicked their U.S. cohorts in trying to squeeze short-sellers.

Rio de Janeiro-based Squadra Investimentos last year uncovered accounting irregularities at IRB, forcing a management overhaul, one of the rare cases in Latin America’s largest market of a short seller targeting a particular company. The reinsurer is suing former management.

In a Facebook group called “IRBR3 Forum Investing,” with 8,300 members, investors have been discussing their moves and show the brokers that are buying the stock, with an open invitation to others to join WhatsApp and Telegram groups to further discuss strategy.

In the messages, they say their intention is to mimic U.S. retail investors using derivatives and coordinating buying in social media forums that have sparked massive rallies in stocks such as GameStop Corp.

It was unclear, however, when the group had formed and whether its members were also using options to bet on the reinsurer, which in early January said it was hiring a consulting firm to help it plot a strategic overhaul.

Brazilian securities industry regulator CVM said in an e-mail to Reuters that it will analyze the sharp rise in the stock. (Reporting by Tatiana Bautzer and Carolina Mandl; Editing by Steve Orlofsky)