By Brazil Stock Guide – Brokerage firm XP Inc. (NasdaqGS: XP) has launched a recovery fund to compensate retail investors who suffered heavy losses on structured notes (COEs) tied to Ambipar’s international bonds, after a forced liquidation of the operation wiped out roughly 73% of invested capital, according to a report by Valor Econômico. The new vehicle, called Recovery AMB FIM IE RL, will be offered exclusively to affected clients and will invest directly in Ambipar debt now trading at deep discounts on the secondary market.
The COEs, structured by XP and backed by Ambipar bonds, were automatically liquidated in September after the securities fell more than 50% of their face value. Investors received about 7% of their principal upon liquidation — in addition to 20% in prior interest payments — avoiding a full default but still suffering near-total losses. The automatic trigger, embedded in the product’s terms, reignited criticism of how complex instruments are marketed to retail clients as if they were low-risk investments.
XP said the recovery fund gives investors a new opportunity to recoup part of their losses should Ambipar’s credit recover. Analysts, however, view the move as reactive and cosmetic, arguing that XP’s aggressive distribution model — which packaged sophisticated products for unsophisticated investors — lies at the heart of the problem.
“In XP’s COE, the execution was automatic, without asking clients if they wanted to exit. In BTG’s, it only happens in case of default,” said Diego Ramiro, head of the Brazilian Association of Investment Advisors (Abai). “That detail completely changes the investor experience.”
The fund will be passively managed, charging a 0.10% annual fee, with a three-year lock-up and no liquidity until maturity. It plans to buy Ambipar bonds at 10–15% of face value, distributing returns proportionally to investors. Because the debt is denominated in U.S. dollars, the fund will also be exposed to foreign-exchange fluctuations.
The episode has reignited debate over governance, transparency, and financial literacy in Brazil’s fast-growing structured-products market. “There’s a mismatch between the complexity of COEs and the simplicity with which they’re sold,” said investment specialist Ana Laura Magalhães. Many investors, she noted, rely on the perceived solidity of the issuing institution rather than understanding the risk of the underlying asset.
Ambipar, active in environmental management and emergency response, has been identified as a victim — not a perpetrator — of the fraud that triggered the crisis. The company continues to cooperate with authorities and reaffirm its commitment to transparency while maintaining normal operations and investor communications.
The XP–Ambipar case underscores the need for tighter oversight and clearer disclosure standards in Brazil’s financial industry. Experts argue that intermediaries must assume greater accountability when marketing complex instruments to retail investors.
While XP’s recovery fund may help limit reputational damage, observers see it as a temporary fix for a deeper structural flaw — one that exposes the ongoing tension between financial innovation and investor protection in Brazil’s evolving capital markets.ts.
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