Everyday, the CVM’s Department of Investor Education and Assistance receives an expressive number of inquiries, denunciations and complaints. Usually people call us because they have questions or problems. Other times they only want to present their comments or ask for further information. They use to contact us by telephone, fax, mail or e-mail.

In this section, we’ll talk about the way we deal with public denunciations and complaints and our daily work to answer them quickly.

We’ll also tell you about the CVM’s role in the Brazilian securities market and its objective of protecting and assisting investors.



THE ROLE OF THE CVM

The CVM was created by the Law nº 6385, of December 7, l976. By creating a regulatory agency, the federal government sought to develop and strength the Brazilian securities market. This Law extended to the CVM the mission of investor protection, overseeing the conduct of brokers, dealers and other participants of the securities industry.

Although complex, the legislation over the securities market can be summarized by these two essential maxims below:

• Securities market’s participants must provide full disclosure of information of their business, as only by having accurate and adequate information investors will come to a decision.

• The professional of the securities market should be honest and fair, giving priority to the investors’ interests.

When the companies issue shares, debentures or other securities for public distribution, they have to be registered with the CVM and should provide investors with periodic information.

Portfolio managers, investment consultants, mutual funds, securities funds, companies and independent auditors have to be registered with the CVM, which is in charge of overseeing them in order to ensure the honesty and disclosure of their practices. They have also to provide regular information to allow investors to monitor their investments.

The CVM’s Department of Investors Education and Assistance was created with the main purpose of giving investors direct assistance.

By answering your letter we are accomplishing our function of assisting you. Thus, your letter is extremely important because it may exposes misconducts or unfair practices of any agent of the securities market. Your denunciation can also points out a violation of any of the CVM’s rules, to which some sanctions should be imposed.



ANSWERING TO THE INVESTOR

 
The Commission’s staff has been trained to analyze investors complaints. People are used to contact us and we have the daily task of giving investors satisfactory resolutions to their complaints and denunciations. We do our best to give prompt and complete answers to their inquiries, by telephone, mail or e-mail.

The general public wants to know if a company is registered with the CVM or if its financial statements (as annual or quarterly reports) are filed with the Commission.

Some investors don’t know about the CVM’s authority of conducting an investigation or imposing sanctions to brokers unfair practices. Many of their inquiries demonstrate that they are concerned about that.

Investors used to call us to ask what are the risks of an investment, or to tell us about their apprehension for eventual unauthorized trades in their accounts.



INVESTORS’ COMPLAINTS

 
The CVM takes the following procedures related to investors’ complaints:

Analysis of the complaint and decision about the necessity of sending it to other CVM’s areas as, for example, the Department of Corporation Relationship, the Department of Market Relationship, the Department of Institutional Investors Relationship and the Department of Enforcement.

• As soon as we receive the requested opinion, our analysts can ask the broker or the company object of the complaint to send us further explanation or to send us a copy of the explanation sent directly to the investor.

• Sometimes, in order to find out what really happened, we may request some copies of documents or ask for further information which might help us to resolve the complaint.

By adopting the procedures listed above, we very often are able to present a satisfactory answer to the investor’s complaint. However, in many other cases, when we are not sure about who is quite right, we have to analyze the investor complaint by carrying out administrative proceedings as the CVM has the duty of investigating denunciations of possible law violation in securities transactions.



OUR LIMITATIONS AND THE INVESTOR’s RIGHTS

The CVM cannot act as the investor’s lawyer or force a broker or a company to answer to the investor complaint. Nonetheless, we can act in an administrative level, initiating an administrative process to investigate irregularities or unfair practices in the securities transactions. When these investigations show evidences of fraude or law violation, the Commission can impose to the guilty agent the penalties listed below:

• A warning;

• A fine up to maximum limit of R$ 500,000.00, or the equivalent of 50% of the issue value of an irregular transaction or, alternatively, the equivalent of three times the sum of economic advantage gained, which can be tripled in the event of repeated practices;

• suspension of administrative functions of members of the companies or other securities agents registered with the CVM;

• suspension of authorization to carry out the activities described in law;

• cancellation of authorization to carry out the activities described in law;

• temporary disqualification, up to a maximum period of 20 years, for carrying out their functions;

• temporary denying, up to a maximum period of 20 years, for those who depend on registration in the CVM to acomplish certain activities or transactions in the securities market;

• temporary prohibition, up to a maximum of 10 years, to operate in certain kinds of operations in the securities market.

In adition to the actions taken by the CVM, investors can also seek to solve their complaints through the courts, by initiating private legal actions, as securities laws provide legal rights in the cases of wrongdoings.