Investment Funds and Structured Finance Newsletter – January 2023

The Investment Funds and Structured Finance Newsletter provides information on the main administrative acts, rules, and legal texts regarding the regulation of the investment funds, asset management, and structured operations.

This newsletter is for informative purposes only, and should not be used for decision making. Specific legal advice can be provided by one of our lawyers.

HIGHLIGHTS

CVM launches Sustainable Finance Policy

In January 2023, the Brazilian Securities and Exchange Commission (“CVM”) launched its Sustainable Finance Policy, which aims to consolidate, organize and structure the CVM’s sustainable finance work, as well as to improve the publicity and reporting of the results of activities.

The CVM’s initiatives within the scope of sustainable finances will be organized through an action plan. The Superintendence for Investor Protection and Guidance (“SOI”) reiterated that the document will be a guide for monitoring and overseeing these activities. The action plan will be drafted based on proposals to be submitted by different superintendencies of the CVM, and then consolidated by the SOI and submitted to the Governance and Strategic Management Committee (“CGE”).

In December 2022, the CVM attended the 1^st International Conference on Sustainable Finance and Creative Economy in the State of Amazonas, in which it affirmed to prioritize and focus on sustainable finance and the ESG agenda. Also in December, the CVM published the new Regulatory Framework for Investment Funds (CVM Resolution 175), which restricts the use of terms related to sustainable finance only to funds whose investment policies seek to generate social, environmental, or governance benefits.

For more information, access the Sustainable Finance Policy.

CVM publishes additional guidelines regarding Inspection Fee

On December 29, 2022, the Superintendence for Oversight of Institutional Investors (“SIN”) and the Superintendence of Securitization Oversight (“SSE”) of CVM published CVM/CVM/SIN Circular Letter 4/2022. 

The document aims to introduce additional guidelines on the levy and collection of inspection fees on the securities market, under Law No. 7,940 and, more specifically, to clarify two items of the Joint Circular Letter No. 2/2022/CVM/SIN/SSE, directed at investment fund managers (“Joint Letter”).

The technical areas of CVM clarified items 18 and 30 of the Joint Circular Letter, which provide for the legislative option of not requiring an annual inspection fee within the first year of operation of regulated companies registered after the first four-month period (“Annual Fee”). According to items 18 and 30 of the Joint Circular Letter and Law No. 7,940/89, the Annual Fee can be optional within the first year:

i. for investment funds registered after the first quarter;

ii. for funds registered after the first quarter and closed within the same year; and

iii. for service providers that are registered after the end of the first quarter of each year.

Notwithstanding the legislative option mentioned above, there is a specific exception in article 4, paragraph 5, of Law No. 7,940, which provides for the billing of the Annual Fee within the first year of registration, even if such registration took place after April 30 (end of the first quarter), for the market participants listed in Annex II of such Law (audit service providers, securities consultants – individuals and legal entities, among others). Thus, exemption from the Annual Fee within the first year of registration, as described in items 18 and 30 of the Joint Circular Letter No. 2/2022/CVM/SIN/SSE, applies only to service providers supervised by SIN and SSE listed in Annexes I and III of Law No. 7,940, and the fee is still applicable for the participants listed in Annex II of the Law.

For more information, access CVM/SIN/SSE Circular Letter 4/2022 and CVM/SIN-SSE Circular Letter 02/22.

CVM publishes new Regulatory Framework for Investment Funds

In December 2020, CVM opened a public hearing to amend and consolidate the regulations regarding investment funds.

Brought on by the innovations of Law No. 13,874, of September 20, 2019 (the Economic Freedom Law), the draft rule introduced by the public hearing aims to modernize the fund market in Brazil, in addition to bringing a new specific regulation of investment funds in credit rights, whose last substantial reform dated back to 2013 – published with the purpose of imposing restrictions on situations of conflicts of interest – and had already been the subject of review by CVM.

Two years after this process was initiated, CVM Resolution 175 was published on December 23, 2022, and will enter into force as of April 03, 2023.

Below we highlight the main changes and innovations brought by the new regulatory framework for investment funds.

Main Innovations of the Regulatory Framework

CVM Resolution 175 introduces the following approach to the regulation of investment funds:

i. a general text, which contains the provisions applicable to all categories of investment funds; and

ii. normative annexes for each category of investment funds.

Initially, the rule introduced annexes related to:

i. Investment funds previously regulated by CVM Instruction 555, of December 17, 2014, renamed Financial Investment Funds (“FIF”), including investment funds in stocks, foreign exchange, multimarket and fixed income.

ii. Credit Rights Investment Funds (“FIDC”), regulated by CVM Instruction 356, of December 17, 2001, and by CVM Instruction 444, of December 8, 2006.

CVM is expected to publish the annexes on Private Equity Investment Funds (“FIP”) and Real Estate Investment Funds (“FII”), since their rules will be repealed by CVM Resolution 175 as soon as it enters into force.

For more information, access Demarest’s Client Alert and the full CVM Resolution No. 175.

New CVM rule on public offerings enters into force

On January 02, 2023, CVM Resolution No. 160 of July 13, 2022, entered into force.

CVM Resolution 160 replaced CVM Instructions 400 and 476 and became the general rule applicable to public offerings for primary or secondary distribution of securities in Brazil. The rule seeks, among other objectives, to bring more flexibility to the capital markets offerings in Brazil.

It is important to highlight that one of the main changes brought by the Resolution, which replaced the offerings exempt from distribution registration (CVM Instruction 476), was the adoption of an automatic registration procedure, which preserves, from an operational perspective, the main advantages of restricted effort offerings governed by CVM Instruction 476. In addition, by replacing the registration system of public distribution offerings based on CVM Instruction 400, the ordinary registration procedure before the CVM was established.

For more information, access CVM Resolution No. 160.

Our specialists have also prepared an analysis per type of security, which can be accessed here.

CVM provides guidance on request for automatic offering registration

On December 30, 2022, the CVM’s Superintendence of Securities Registration (“SRE”) published CVM/SRE Circular Letter 3/2022, complemented, on January 13, 2023, by CVM/SRE Circular Letter 1/2023.

The purpose of CVM/SRE Circular Letter 3/2022 was to provide guidance to intermediary institutions on the new procedures to be followed in the requirements for automatic registration of public offerings for distribution of securities, given the entry into force of Resolution CVM 160 on January 02, 2023.

The SRE – CVM Offerings Registration System (“SRE – CVM System“) was created to receive all registration requests regarding public offerings for distribution and acquisition forwarded to the SRE. On January 02, 2023, the automatic registration module of the SRE-CVM System went into operation, along with the effectiveness of CVM Resolution 160.

The SRE-CVM System can be accessed through the “System Central” (Central de Sistemas), on the CVM website (CVM Systems). Through this page, the System will be available by logging into the “CVMWeb System”, under “Submission of Documents”.

Requests for registration of public offering of securities that follow the ordinary registration model provided for in article 28 of CVM Resolution 160 must continue to be submitted through the Digital Protocol of CVM.

Additionally, CVM/SRE Circular Letter 1/2023 sought to clarify doubts of the coordinators after about ten days of using the SRE – CVM System, in addition to CVM/SRE Circular Letter 3/2022.

The technical area of CVM reiterated that public offerings carried out under the automatic registration model must be submitted through the SRE – CVM System before the search for investors is initiated.

For more information, access CVM/SRE Circular Letter 1/2023 and CVM/SRE Circular Letter 3/2022.

CVM publishes clarifications on system for submitting information regarding offerings by securitization companies and Law No. 14,430

On January 03, 2023, the CVM Superintendence of Securitization Oversight (“SSE”) published CVM/SSE Circular Letter 1/2/2023, and on January 11, 2023, CVM/SSE Circular Letter 2/2023.

The Circular Letters aim to provide clarifications about the submission of information concerning the Offering Summary, established by article 23 of CVM Resolution 160, which must be made available via the Fundos.NETsystem.

In addition, the SSE provided clarification on the possibility of including new classes and series of the same issuance in securitization operations, according to the provisions of article 22, item X of Law No. 14,430/2022. According to the article:

Art. 22. The Receivables Certificates included in each issuance of the securitization company will be formalized by means of a securitization agreement, containing the following information: X- the issuance number and possible division of Receivables Certificates of the same issuance into different classes or series, including the possibility of subsequent additions for inclusion of new classes and series and requirements for complementation of guarantees, when applicable.

The CVM takes the understanding that since CVM Resolution 60 was published prior to Law No. 14,430/2022, it does not include all possibilities in which a new series of receivable certificate may be issued. Consequently, the CVM believes there is no obstacle for other series arrangements to exist, as long as such procedure is provided for in the instrument of issuance or is resolved at the special meeting of investors.

In addition, the technical area advises securitization companies about the system for submitting information and registration migration for categories S1 and S2, in accordance with what was disclosed in CVM/SSE Circular Letter 1/2022, so that:

i. Any information, periodic or not, regarding the securitization company itself and issuances must be submitted exclusively through the Fundos.NET system.

ii. As for public offerings of securities (CRI, CRA, Receivables Certificates, Securitization Debentures, and others) issued by securitization companies registered in the S1 or S2 categories, the Securitization Offering Summaries must be published through the Fundos.NET system, for each specific issuance.

For more information, access CVM/SSE Circular Letter 2/2023.

CVM joins ANBIMA event on the new regulatory framework for investment funds

On January 12, 2023, CVM participated in the event Fala, CVM: nova regulação de fundos (“CVM Speaks: new regulation of funds”), held by the Brazilian Financial and Capital Markets Association (“ANBIMA”), to discuss the impacts of the new Regulatory Framework for Investment Funds for service providers and investors.

During the event, João Pedro Nascimento, president of CVM, discussed the importance of the investment fund industry in Brazil, highlights for growth, guidelines for the reform of funds, and the benefits of the new rule.

At the event, the CVM took the opportunity to clarify several questions raised by the attendees regarding, especially, the following topics:

i. new rules for commissions;

ii. operational issues involved in the creation and administration of classes and sub-classes;

iii. new obligations for service providers, mainly the Manager; and

iv. greater visibility, by the end investor, of all maximum administration, management, distribution, performance and commission fees.

For further information, please access:

CVM Article.

Recording of the event

ANBIMA Article.

President of CVM comments on Resolution 175, the new investment fund rule

In an interview with ANBIMA, João Pedro Nascimento, president of the CVM, reflected on the new regulatory framework for investment funds, published by CVM on December 23, 2022.

According to Nascimento, the new rule not only provides greater security for the assets of investors, but also more rights, powers, and privileges to the investing public, who now have new possibilities and options for investments, to be carried out with security and compliance regarding investor protection.

Some examples mentioned in the interview include:

i. investment in Credit Rights Investment Funds (FIDCs) by the general public;

ii. flexibility for investment in assets abroad, even for funds aimed at non-qualified investors; and

iii. possibility of limiting the liability of each shareholder to the amount of their respective shares.

Other benefits addressed include access to correct information about the remuneration chain of service providers and the facilitating of political participation.

Access the interview in full here.

ANBIMA to share fund data analysis with CVM

In January 2023, ANBIMA began sharing daily analyses carried out on net equity and “555 funds” quotas with CVM. The purpose of these analyses is to point out any inconsistencies identified in the database and corrections made by the participating institutions.

The submission of data from financial institutions to CVM remains the same, but the regulator now receives the analysis carried out, as well as the curation of this data.  The intention is to enable an expansion of ANBIMA’s agreement with CVM for a more efficient use of self-regulation activities in the investment funds industry. 

For more information on the agreement, access the ANBIMA website.

ETFs that pay dividends can be listed on B3 from January 30

As of January 30, 2023, Exchange Traded Funds (“ETFs”) of local and international entities that pay dividends can be listed and traded at B3.

ETFs are investment funds that have their shares traded on a stock exchange, enabling greater liquidity for the investor of this asset. They are called “index funds” because they follow the performance of a reference index, which can be Brazilian or international.

The ETF manager may establish, in the fund’s regulation, a period for the distribution of profits. Such distribution can be carried out monthly, semi-annually, annually, or any other period, but never in a period of less than 30 days.

The product represents a new option for investors, who can now trade crypto assets and fixed-income ETFs, in addition to the already traditional stock index ETFs, such as ETFs that follow Ibovespa B3 and ISE B3.

For more information, access the B3 article here.

CVM DECISIONS

CVM rejects proposed settlement agreement for resolving sanctioning proceeding against investment club manager

This decision refers to a proposal for a Settlement Agreement to terminate the CVM Sanctioning Administrative Proceeding 19957.009395/2021-78 (“PAS”), jointly submitted by a certain individual, in its capacity as manager of an investment club (“Manager” and “Club”, respectively) and in charge of issuing trading orders on behalf of such Club, and by a certain investor of the Club (“Investor”), within the scope of the PAS and brought by the Superintendence of Market and Intermediary Relations (“SMI”).

The PAS was created by SMI to clarify alleged irregularities of the Manager due to alleged fraudulent operations through coordinated trades, with results previously adjusted between the Investor and the Club. Such operations are alleged to have generated the transfer of resources to the Investor to the detriment of the other shareholders of the Club, which could constitute a violation of item I of CVM Instruction 8/79 (repealed and replaced by CVM Resolution 62/2022).

The Parties proposed, through the Settlement Agreement:

i. Compensation to the damaged parties: transfer to the shareholders the amount specified by the Settlement Agreement Committee, proportionally and as updated by the Broad National Consumer Price Index (“IPCA”) – from November 26, 2020, until the date of actual payment -, as provided for in the Opinion on the Settlement Agreement.

ii. Pay to CVM, as diffuse damages caused to the market, the amount of BRL 28,034.03, which corresponds to 20% of the updated amount of the damage specified in the complaint (BRL 117,011.53).

On October 25, 2022, the Settlement Agreement Committee decided to reject the Settlement Agreement, as did the Collegiate Board of CVM in a decision dated January 10, 2023. The Committee and the Collegiate Board of the CVM argued that it would be neither convenient nor opportune to accept the Settlement Agreement, in view of how serious the actions of the parties were within the context of the complaint, as well as the difference between the amount proposed as compensation for diffuse damages and what was considered by the CVM as appropriate and sufficient compensation to discourage similar practices.

For more information, access the Opinion on the Settlement Agreement.

CVM accepts proposed settlement agreement to resolve administrative proceeding against fund manager that failed to report important negotiation

The decision concerns a proposed Settlement Agreement to resolve CVM administrative proceeding 19957.011066/2022-78 (“AP”), submitted by a certain asset manager (“Manager”) prior to the opening of a Sanctioning Administrative Proceeding by the Superintendence of Company Relations (“SEP”).

 The AP was filed to investigate an alleged failure in the duty to inform, in a timely manner, of an important negotiation that reduced the equity interest of investment funds in a publicly held company under the Manager’s management, which would constitute a violation of art. 12 of CVM Resolution 44/21.

 The Manager proposed, by means of a Settlement Agreement, to pay the amount of BRL 75,000.00 in a single installment to CVM, as compensation for diffuse damages allegedly caused. Additionally, the Manager argued that:

i. there was no intention to conceal information about the reduction of equity interest of the fund in the publicly held company;

ii. the lack of a timely communication was due to an operational error;

iii. immediate communication had been made as soon as the failure was detected, by means of a full and detailed notification to the publicly held company;

iv. internal controls had been improved; and

v. the occurrence had been spontaneously reported to CVM.

 Therefore, the Settlement Agreement Committee decided, on November 01, 2022, to accept the proposed Settlement Agreement, as did the Collegiate Board of CVM, in a decision dated January 10, 2023, and suggested the Administrative and Financial Superintendence be appointed to monitor compliance with the compensation obligation assumed by the Manager.

For more information, access the Opinion on the Settlement Agreement.

CVM rejects proposed settlement agreement to terminate PAS against securities offeror

The decision concerns a Settlement Agreement jointly proposed to resolve PAS CVM 19957.006765/2021-15 (“PAS”), submitted by:

i. a certain securities offeror (“Offeror”);

ii. a certain individual, in the capacity of officer of the Offeror (“Officer”);

iii. another individual, in the capacity of officer and partner of a company that holds controlling interest in the Offeror (“Director Partner”); and 

iv. another individual, in the capacity of partner of the company holds controlling interest in the Offeror, within the scope of the PAS brought by the Superintendence of Securities Registration (SRE).

The PAS was created by SRE to investigate alleged irregularities carried out by the Offeror and the Managing Partner, for a possible fraudulent operation, in violation of article 10 of CVM Instruction 476, with the alleged offering of securities without obtaining registration and/or exemption from registration.

The complaint was based on a lawsuit filed on October 26, 2020, to address a consultation made by a market participant that acts as a leading intermediary in public offerings, regarding a public offering of securities to be conducted by the Offeror, pursuant to CVM Instruction 476, in force at the time. During that period, the Offeror was already involved in two Sanctioning Administrative Proceedings before the CVM for irregularly carrying out public offerings of securities, without obtaining registration and exemption from registration.

Consequently, the serious nature of the consultation made by the market participant, as mentioned above, was considered sufficient to reformulate the previous complaints, given the understanding that this was a possible fraudulent capital markets operation.

The Settlement Agreement proposed performance commitments and financial obligations, as follows:

Performance Commitments:
i. to implement, within 60 days from approval of the Settlement Agreement by the Collegiate Board of CVM:

a. an internal policy for contracts of any nature with related parties; and

b. an instruction manual for employees about the private sale of securities, establishing biannual recycling programs for employees on the subject;

ii. to sign contractual amendments to each of the loan agreements entered into between the Offeror and other parties, to establish payment of interest, periods for payment and the submission of guarantees, among other conditions; and

iii. to regularize all its accounting, including the independent audits of its financial statements, until the end of the fiscal year following the approval of the Settlement Agreement by the Collegiate Board of CVM.

Financial Obligation:
i. Corresponding to BRL1,500,000.00, allocated between the parties according to the Opinion on the Settlement Agreement.

The Specialized Federal Attorney General’s Office at the CVM (“PFE-CVM”) decided that the legal requirement will be deemed as fulfilled, since it is not possible to cease what no longer exists, whenever:

i. any alleged irregularities take place prior to the accusation, and it is not a continuous illicit act; or

ii. there are no indications in the records of continuity of the practices claimed as irregular.

The PFE-CVM analyzed the legal aspects of the proposed Settlement Agreement and stated that there was no legal obstacle.

On the other hand, regarding the requirement for correction of violations, the PFE-CVM considered that the parties reported that, at the time of the Settlement Agreement was proposed, 14 lawsuits had been filed by investors dissatisfied with the negotiated terms of payment, and that all of them together represented an amount of approximately BRL 5 million. Consequently, the PFE-CVM understood that there were losses that had not yet been compensated, that is, the legal requirement contained in articles 11, paragraph 5, II of Law No. 6,385/1976 and 82, caput, II of CVM Resolution 45 of August 31, 2021, was not fulfilled.

Therefore, on October 25, 2022, the Settlement Agreement Committee decided to reject the Settlement Agreement proposed, as did the Collegiate Board of CVM, in a decision dated January 10, 2023, particularly considering that there is a legal obstacle due to losses that have not yet been compensated, according to the Opinion on Settlement Agreement, available through the link below.

For more information, access the Opinion on the Settlement Agreement.

CVM rejects proposed settlement agreement to resolve the sanctioning proceeding that investigates alleged offering of securities without registration

The decision concerns a Settlement Agreement jointly proposed to resolved PAS CVM SEI 19957.001908/2021-01 (“PAS”), submitted by a certain corporation (“Company”), as offeror, and a certain individual, as a partner and manager of the Company (“Partner”), within the scope of the PAS brought by SRE.

The PAS was established by SRE to investigate alleged offering of securities without prior registration through a certain website. The PAS was initiated by complaints from investors about potential irregularities involving a cryptocurrencies investment proposal.

This was a potentially irregular offering of Collective Investment Agreements (“CICs”), since, on its website, the Company:

i. advertised high investment returns for those investing in bitcoins through the trading platform made available and sold by the Company, in addition to stating that its partners had ANBIMA Professional Certification, among other appealing features; and

ii. provided General Terms and Conditions, which the interested investor had to sign to gain access to the services offered by the company.

The parties proposed, through a Settlement Agreement, to pay the CVM the amount of BRL 200,000.00, in a single installment.

The conclusions of the PFE-CVM regarding the existence of a legal obstacle to the execution of a Settlement Agreement in this case are based on the complaints of CVM, in which the technical area reiterates that the Company did not cease the irregular public offering of securities and that a new investigative procedure was initiated.

Correcting the assumptions adopted by the prosecution requires investigating the entire factual and evidentiary set. Therefore, when analyzing the merits of the accusation, which is not applicable within the scope of the Settlement Agreement, it is not up to the PFE-CVM to rule out the conclusions of the technical area with respect to the absence of the assignment/continuity of irregularities, concluding, therefore, that the legal obstacle to the execution of a Settlement Agreement is maintained, given the non-compliance with the requirement provided for in paragraph 5 of article 11 of Law No. 6,385/76.

In this case, the analysis of the Settlement Committee is guided by the major circumstances surrounding the case, and it is not responsible for analyzing the merits and own arguments of the defense. In this case, the analysis of the Settlement Agreement Committee is based on the major circumstances surrounding the case. The Committee is not in charge of analyzing the merits and arguments of the defense.

On November 08, 2022, the Settlement Agreement Committee decided to reject the Settlement Agreement proposed, as did the Collegiate Board of the CVM in its decision dated January 10, 2023, considering the legal obstacle pointed out by the PFE-CVM, as stated in the Opinion on the Settlement Agreement available through the link below, and the persistence of the parties in maintaining potentially fraudulent practices.

 For more information, access the Opinion on the Settlement Agreement.

CVM Collegiate Board holds FIP Manager and Administrator liable for failure to comply with due diligence requirements

CVM Administrative Sanctioning Proceeding 19957.003200/2017-08 (“PAS”) was brought by the Superintendence for Oversight of Institutional Investors (“SIN”) against an investment fund administrator (“Administrator”), an investment fund manager (“Manager”), and their respective officers in charge of the securities portfolio management activity (“Officers”).

The parties were accused of lack of due diligence in monitoring the services provided by third parties contracted by the fund, in violation of articles 65, item XV, and 65-A, item I, of CVM Instruction No. 409/2004, given that they are liable for any violations or irregularities potentially carried out by the administration or management of the fund.

On December 28, 2014, an enquiry was lodged to the CVM about possible fraud involving two equity investment funds (“FIPs”) administered and managed by the Administrator and the Manager, respectively. Both had acquired, on behalf of the funds, shares and debentures of a certain corporation that did not meet the requirements established by CVM Instruction 391/2003, in force at the time of the facts.

In view of the above, the Collegiate Board of CVM made a unanimous decision, ordering:

i. the Administrator to pay a fine for each one of the FIPs, for lack of due diligence in the administration of the funds and failure to inspect the Manager (violation of arts. 65, XV, and 65-A, I, of CVM Instruction No. 409);

ii. the Manager to pay a fine for each one of the FIPs, for lack of due diligence in the management of the funds; and

iii. the Directors to pay a fine for lack of due diligence in the administration and management of the Administrator and the Manager.

For more information, access the report.

CVM Collegiate Board holds defendant liable for irregularly exercising the activity of securities portfolio manager

This is a CVM Administrative Sanctioning Proceeding 19957.003200/2017-08 (“PAS”) opened by SMI, against a certain individual (“Defendant”), for:

i. irregularly exercising the activity of manager of a securities portfolio (“Portfolio”), in violation of article 23 of Law No. 6.385/19761, article 2 of CVM Instruction No. 558/20152 and art. 13, IV, of CVM No. 497/20113;

ii. acting as a de facto independent investment agent (“AAI”), without being linked to any institution belonging to the securities distribution system, in violation of article 3, main section and items I and II, of CVM Instruction 497/20114;

iii. receiving and using an investor’s password, in violation of article 13, VII, of CVM No. 497/2011;

iv. receiving amounts directly from an investor, in violation of article 13, II, of CVM No. 497/20116; and

v. being in non-compliance with the regulatory rules in force, as well as recurrently violating determinations made by self-regulators, having failed to comply with the requirements of article 10 of CVM No. 497/2017.

As a result of irregular management of securities portfolios in 2008 and 2009, the Defendant was sentenced by BSM, in Disciplinary Administrative Proceeding (“PAD”) No. 07/201010, to disqualification, for a period of three years, from exercising all professional activities related to the markets managed by B3. The Defendant was then disqualified from acting as an AAI in such markets from September 18, 2012, to September 17, 2015.

On March 08, 2017, an investor complaint was sent to BSM, in which the investor claimed that the Defendant had committed unlawful acts. According to the complainant, the Defendant had presented himself as “a broker and an authorized agent to trade on the stock markets managed by BM&F Bovespa S/A” and “by acting with obvious bad faith, used the complainant’s personal information to fraudulently carry out several variable-income transactions on his behalf. Such complaint resulted in the filing of a claim for compensation from said investor under MRP No. 102/2017.”

In view of the above, the Collegiate Board of CVM decided, unanimously, to order the Defendant to:

i. Pay a fine for irregularly exercising the activity of securities portfolio manager (violation of article 23 of Law No. 6,385, article 2 of CVM Instruction 558 and article 13, IV, of CVM Instruction 497).

ii. A 60-month ban from acting directly or indirectly in any type of securities market transaction, for having irregularly acted as a de facto investment agent, without being linked to any institution belonging to the securities distribution system (violation of Article 3 of CVM Instruction 497).

iii. A 60-month ban from activities that depend on authorization or registration with CVM, because, as a de facto independent investment agent, the Defendant received and used an investor’s password, received amounts directly from an investor and recurrently acted in a manner that was incompatible with his duties of care and diligence (violation of articles 10 and 13, II and VII, of CVM Instruction 497).

For more information, access the report.