{"id":3296,"date":"2024-07-17T20:43:08","date_gmt":"2024-07-17T20:43:08","guid":{"rendered":"https:\/\/dclegalpartners.com\/?p=3296"},"modified":"2024-07-30T00:21:37","modified_gmt":"2024-07-30T00:21:37","slug":"does-cvm-have-the-authority-to-prosecute-punish-foreign-institutions-without-a-physical-presence-in-brazil","status":"publish","type":"post","link":"https:\/\/dclegalpartners.com\/pt-br\/does-cvm-have-the-authority-to-prosecute-punish-foreign-institutions-without-a-physical-presence-in-brazil\/","title":{"rendered":"Does CVM have the authority to prosecute, punish foreign institutions without a physical presence in Brazil?"},"content":{"rendered":"

Yes, according to Brazilian Law No. 6,385\/76, CVM has the authority to investigate, punish fraudulent conduct in the securities market. There are at least two grounds for this:<\/p>\n\n\n\n

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  1. When the effects of fraudulent conduct cause harm to people residing in the Brazilian territory (Art. 9, \u00a76, I); and<\/li>\n\n\n\n
  2. When the acts of foreign entities are considered to have been practiced in the Brazilian territory (Art. 9, \u00a76, II).<\/li>\n<\/ol>\n\n\n\n

    <\/p>\n\n\n\n

    After all, does CVM have the <\/strong>authority<\/strong> to investigate<\/strong>,<\/strong> punish foreign entities that are not physically located in Brazilian territory? How does CVM generally interpret these provisions of Brazilian Law?<\/strong><\/p>\n\n\n\n

    A) Fraudulent Conduct in the Securities Market: CVM’s Interpretation<\/strong><\/p>\n\n\n\n

    The CVM (Comiss\u00e3o de Valores Mobili\u00e1rios, or Brazilian Securities and Exchange Commission) defines fraudulent conduct in the securities market as any act of bad faith practiced with abuse of trust or clandestinely, without being registered with the CVM when it should be. This means that a foreign entity that illegitimately carries out regulated activity in Brazil is engaging in fraudulent conduct if it does not have the proper authorization, license, registration, or exemption from registration from the competent Brazilian regulators. This is a typical case of foreign entities, many of them licensed in their country of origin, that are not members of the securities distribution system in Brazil, capturing or attempting to capture resident investors in Brazil as their clients, especially through the use of the internet.<\/p>\n\n\n\n

    <\/p>\n\n\n\n

    B) Harm to Persons Resident in the Brazilian Territory<\/strong><\/p>\n\n\n\n

    To meet this requirement, the CVM verifies whether there are complaints from investors residing in Brazil against the foreign entity, either through the CVM’s own communication channels made available to Brazilian investors or through general consumer complaint forums in Brazil, such as Reclame Aqui (https:\/\/www.reclameaqui.com.br<\/a>).<\/p>\n\n\n\n

    <\/p>\n\n\n\n

    C) Acts Practiced in the Brazilian Territory<\/strong><\/p>\n\n\n\n

    To fulfill these requirements, the CVM generally checks the website and social media profiles of the foreign institutions to identify indications of activities and practices aimed at investors residing in Brazil, such as:<\/p>\n\n\n\n