Amec submits suggestions on CVM’s new sanctioning milestone

Amec participated in the public hearing that will result in the new sanctioning milestone of the Brazilian Securities and Exchange Commission (CVM). The draft, disclosed to the market in June, addresses the investigation of administrative violations, proceedings, imposition of fines, commitment terms and gathers the regulations on the administrative agreement as part of the supervision process (leniency agreement). The document reflects the changes introduced by the Law 13,506/17, which brought up the maximum value of the fines feasible to be applied by the regulator from BRL 500,000 to BRL 50 million, depending on the severity levels of violations.
The CVM suggested maximum base fines ranging from BRL 300,000 to BRL 20 million, depending on the violation. That’s when a system of aggravating and mitigating factors enters the picture and influences on the fines. Amec’s members pointed out there are two situations when fines could be reduced that should be considered by the regulator. The first one is when investors incur no effective losses and the second one is when the violator pay damages and compensation before the proceeding trial.
Yet with respect to the mitigating factors, Amec suggests an adjustment. In the original document, the “effective adoption of internal mechanisms and procedures for integrity, auditing and incentive to report irregularities, as well as the effective application of codes of ethics and conduct within the legal entity” is classified as a mitigating factor. However, it was not clear enough what an “effective adoption” would be. “Members are concerned about the existence of rules of governance and compliance in internal policies and regulations that are not effectively put into practice,” the association stated.
The letter with Amec’s contributions is available here.
The suggestions submitted by other market’s participants is available here.