Recent events in Brazil involving major scandals in public-private relations have certainly led the country to the epicenter of countless internal debates under the spotlight of transparency, ethics and public opinion.
In this sense, the State promulgated Provisional Measure No. 784 of June 7, 2017 (MP 784), which deals with and disciplines the sanctioning process by the Central Bank of Brazil (BACEN) and the Securities and Exchange Commission (CVM), stipulating fines and causing direct impacts on the Financial Market.
Faced with the need for MP 784 to be considered and converted into law by the National Congress, it emerged as a clear message that the State is aware of possible administrative infractions within the aforementioned bodies.
There is clearly a normative hardening linked to an effect of enormous discouragement to the agents that possibly may incur in infractions to the current law. Besides, the MP 784 brings in its context questions among experts in the subject regarding the way that such norms will be applied to each concrete case.
Within BACEN, a novelty in the list of penalties is the public warning that will consist of the publication of the text specified in the conviction decision, as well as the news on the imposition of the penalty which will be published on the BACEN website or in other ways that they deem applicable.
In addition to this penalty, the application of a fine by BACEN, whose maximum value went from BRL 250,000 up to BRL 2 billion, requires our attention.
In the same line, the maximum amount of fines imposed by CVM in case of violation of the law increased from BRL 500,000 up to BRL 500 million.
Another novelty of MP 784 is now the possibility for BACEN or CVM to enter into leniency agreements being considered legally qualified for that. This possibility caused perplexity among members of the Public Prosecutor’s Office at the national level, who, as a general rule, are the ones competent to propose leniency agreements in several cases.
The economic environment in Brazil from the perspective of investors in general has been very dynamic and linked to the promulgation of this MP 784, 784, which was received with many reflections by several specialists.
Therefore, faced with so many changes and the amount of relevant facts routinely exposed in Brazil, the reader of this article may reflect: “Now Brazil has solved the complex problem of administrative illicit transactions within the Financial Market” or “Such changes will certainly change the direction of the investigations in the ambit of the CVM or BACEN “.
We understand that Brazil is moving slowly but firmly on the normative issue involving BACEN and CVM, which requires an improvement to a certain degree and would lead to more discussion with the citizens and public legal entities involved in this issue.
However, it would be unbelievable to say that we are close to a normative solution that definitively balances relations between the public and private sectors and brings positive and stable solutions in the short term, since juridical insecurity and the lack of public debate on these issues need to be better evaluated by the competent bodies.
Flávia Horn Allegro Farah was associate at Pacheco Neto Sanden Teisseire Law Firm.
Allékos Genadopoulos was an associate at Pacheco Neto Sanden Teisseire Law Firm.