By Brazil Stock Guide – Brazil’s securities regulator accepted a settlement with XP Investimentos and founder Guilherme Benchimol requiring payments totaling R$1.485 million to close an administrative proceeding opened in 2017.
The decision was announced Wednesday, Valor Econômico reported. XP will pay R$1.08 million, while Benchimol will contribute R$405,000. The settlement also requires a R$1.2 million payment within 10 business days to the investor whose complaint triggered the investigation.
The case centered on XP’s oversight of independent investment agents linked to Index Capital and asset manager Genus. Both Rio de Janeiro-based firms were associated with Ricardo Barbosa.
The alleged irregularities caused losses of about R$5 million for clients. The money was lost in unsuccessful investments, while the negative results were allegedly concealed in reports sent to investors.
XP terminated its contract with Index Capital in September 2017 after identifying 12 affected clients.
CVM’s technical staff concluded that XP failed to adequately supervise the agents. A significant share of the transactions was allegedly entered by the agents through XP’s trading system, indicating that they were improperly managing client portfolios.
The investigation also found that some clients could not distinguish between the activities performed by the independent-agent office and those of the asset manager. Barbosa, while formally acting as an investment agent, allegedly operated as the effective manager of the portfolios.
CVM rejected Barbosa’s proposed settlement, citing “the alleged seriousness of the case.”
XP said in a statement that the events occurred between 2014 and 2017 and had been “already fully resolved.” The company said it took action against those responsible, cooperated with authorities and “fully reimbursed affected clients.”
The brokerage described the settlement as a regulatory mechanism that allows CVM proceedings to be closed by mutual agreement.
Former Gafisa Board Member to Pay R$1.7 Million
In a separate case, CVM accepted a R$1.7 million settlement from Pedro Carvalho de Mello, a former board member at Gafisa SA (B3: GFSA3). The company’s listing is registered by B3.
Mello had been accused of an alleged lack of care and diligence in approving Gafisa’s share buyback program on Sept. 28, 2018, and in overseeing repurchases conducted from Oct. 1, 2018, through Feb. 14, 2019.
The proceeding also examined his involvement in approving a program to invest in other companies on Dec. 26, 2018.
Regulators investigated whether the decision conflicted with Gafisa’s bylaws and corporate interests and whether it diverted the company from its stated business purpose. Gafisa did not have an investment policy in place at the time, according to the case.
Equatorial Executives Reach Separate Settlements
CVM also accepted settlement proposals from Augusto Miranda da Paz Júnior, in his capacity as chief executive officer, and Leonardo da Silva Lucas Tavares de Lima, in his capacity as investor-relations officer, both at Equatorial Energia SA (B3: EQTL3). The ticker is shown on the company’s investor-relations website.
Each executive will pay R$286,000.
The proceeding investigated the alleged failure to adequately disclose significant weaknesses in internal controls across all versions of Equatorial’s 2021 reference form.
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