Tupi SEC: New Superintendent of Information Asymmetries

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São Paulo elevator news screens (Linux-powered, by the way) are started to pop up in the fancier buildings. “Telefônica denies conversations the Holland’s KPN over a proposed sale” (Friday, October 28). Features a red light-green light (but not yellow-light) heads-up display of traffic conditions on the major roadways that kind of reminds you of the Homeland Security “terror alert level” display (still yellow after these years).

The Comissão de Valores Mobiliários (CVM), Brazil’s securities regulator, announces:

A Comissão de Valores Mobiliários (CVM) informa que a Superintendência de Relações com Investidores Institucionais (SIN) será reestruturada com o objetivo de centralizar em uma única área técnica as atividades relacionadas aos fundos de investimento e seus prestadores de serviços. A partir de 1º de março, Carlos Alberto Rebello Sobrinho assume a SIN, após dez anos à frente da Superintendência de Registro de Valores Mobiliários (SRE).

… that Superintendency of Institutional Investor Relations (SIN) will be restructured with the objective of centralizing activities related to investment funds and their service providers in one technical department. Starting March 1, Carlos Alberto Rebello Sobrinho will take over SIN after ten years as superintendent of the securities registry (SRE).

I am not sure what this means, implies, or bodes, mind you: I am just noting it.

I try to keep on such things.

But with the Cacciola and Dantas cases in the news (or not) lately, adult supervision of the capital markets is certainly an interesting topic.

A mudança na estrutura da SIN inclui a incorporação da Gerência de Acompanhamento de Mercado (GMA-3), encarregada da supervisão dos fundos de investimento de que trata a Instrução CVM nº 409. Essa gerência é coordenada por Luiz Américo de Mendonça Ramos, que continua à frente da área. Francisco José Bastos Santos, atualmente analista da Gerência de Registro, assumirá a Gerência de Acompanhamento de Investidores Institucionais.

The restructuring of SIN includes the incorporation of the [market surveillance department (GMA-3)], which is in charge of overseeing the investment funds dealt with CVM Instruction 409. This department is headed by de Medonça Ramos, who continued to head it. Bastos Santos, currently a securities registry analyst, will take over as [managing director] institutional investor oversight.

Between the superintendente and the gerente, I am not sure how to translate. I guess it’s like Capt. Kirk and his executive officer, Spock. One says “make it so” and the other calls engineering and tells Scottie to lay on more steam.

Nos próximos meses, a SIN passará ainda a incorporar a gerência responsável pela supervisão dos chamados fundos especiais, que é e continuará a ser coordenada por Cláudio Maes. A atividade de supervisão dessa área abrange os Fundos de Investimento Imobiliário; Fundos de Investimento em Participações; Fundos Mútuos de Investimento em Empresas Emergentes; Fundos de Investimento em Direitos Creditórios FIDC e Fundos de Financiamento da Indústria Cinematográfica Nacional.

In the coming months, SIN will also incorporate the department responsible for supervising the so-called “special funds,” which will continue to be run by Cláudio Maes. This department oversees [REITS, mutual funds, venture capital funds, fixed income funds] and funds for the financing of domestic film production.

I need to look those types of funds up. I am supposed to know this sort of thing.

There are also FIDC-NP (nonstandardized) “creditor’s rights investment funds.” CVM Instruction 444 (December 2006):

Para efeito do disposto nesta Instrução, considera-se Não-Padronizado o FIDC cuja política de investimento permita a realização de aplicações, em quaisquer percentuais de seu patrimônio líquido, em direitos creditórios:

For the purposes of this Instruction, those FIDCs are deemed nonstandardized whose investment policy permits investments of any portion of their assets in creditor’s rights: 

I – que estejam vencidos e pendentes de pagamento quando de sua cessão para o fundo;

I — that are past-due and payable when transferred to the fund; 

 II – decorrentes de receitas públicas originárias ou derivadas da União, dos Estados, do Distrito Federal e dos Municípios, bem como de suas autarquias e fundações;

II — that derive from the public [tax] revenue of the municipalites, states, federal Union or Federal District or any of their independent agencies  and foundations;

III – que resultem de ações judiciais em curso, constituam seu objeto de litígio, ou tenham sido judicialmente penhorados ou dados em garantia;

III — that result from pending legal proceedings, are themselves the subject of litigation, are being [held as security] by judicial order or have been pledged as a guarantee;

IV – cuja constituição ou validade jurídica da cessão para o FIDC seja considerada um fator preponderante de risco;

III — Whose legal validity or formality upon [cession] to the FIDC might be considered a preponderant risk factor;   

V – originados de empresas em processo de recuperação judicial ou extrajudicial;

V — originated by a company currently in [supervised or unsupervised bankruptcy];

VI – de existência futura e montante desconhecido, desde que emergentes de relações já constituídas; e

VI —  of a future date and uncertain amount, though deriving from existing [contractual] relationships;

VII – de natureza diversa, não enquadráveis no disposto no inciso I do art. 2º da Instrução CVM nº 356, de 17 de dezembro de 2001.

VII — of a diverse nature not defined under the provisions of Article 2, Paragraph I of CVM Instruction 356 of December 17, 2001.

That is all off the top of my head and very draft-quality. I have to study that a little more. It’s a securitization thing. Back to the article.

O novo titular da SRE será Felipe Claret, que integra o quadro da Autarquia há dez anos e atualmente é Gerente de Registros.

The new head of the SRE will be Felipe Claret, who has worked for the agency for ten years and is currently managing director for securities registration.

A CVM agradece a Carlos Eduardo Sussekind, que deixa a Superintendência de Relações com Investidores Institucionais, pelos serviços que prestou, à frente da área, nos últimos nove anos.

CVM is grateful to Sussekind, the outgoing institutional investor relations superintendent, for his service at the head of the department for the last nine years.

Rebello played a key role in getting past a hitch in the initial pricing of the Bovespa IPO, as this clipping from the Folha reports:

O que incomodou o mercado foi o fato de muitos investidores institucionais (como fundos de pensão e de investimento, além de grandes aplicadores) começarem a saber antes que haveria mudança na faixa de preço. Chegou-se a falar em vazamento de informações.

What unsettled the market was the fact that many institutional investors (such as pension and investment funds, as well as big investors) started learning about the change in the initial price range before it was announced. Some even talked of leaks.

Mas, para Carlos Alberto Rebello Sobrinho, superintendente de registros da CVM, dizer que houve vazamento “é um pouco exagerado”. “O que houve foi uma assimetria de informações entre os investidores. Por isso tínhamos que permitir que o investidor pessoa física tivesse a oportunidade de rever sua sua decisão”, diz Rebello Sobrinho.

But in the view of Rebello, superintendent of the CVM’s securities registry, saying there was a leak “is a little exaggerated.” “What there was was an asymmetry of information among investors. For that reason we had to let individual investors review their decision,” said Rebello.

This talk of “information assymetries” is not complete double-talk. See also, more generally,

First, price updates during the registration period are predictable based on firm and offer-specific characteristics known at the time the offer is filed. Second, price updates reflect market movements prior to the initial filing date as well as during the registration period. Third, positive and negative information learned during the registration period affect the offer price asymmetrically. Finally, public and private information learned during the registration period have different effects on the offer price. While a number of the biases that we uncover are consistent with one or more theories regarding IPOs, many remain a puzzle.

It is a certainly a puzzle to me.

I majored in poetry.

But I guess that explains, in general terms, why the CVM has been closely questioning the exchange about its public communications. See

I think it is fair to say that the Bovespa, with its Mercado Novo tiered listings segment tied to corporate governance criteria, is an important symbol of national progress.

So protecting its reputation for promoting fair dealing is, as they say, strategic.

The Brazilian federal police recently made headlines putting an end to a globalized brokerage scam operated in São Paulo and Buenos Aires, for example. See

And I think (I am guessing) that if you followed the “Brazilian SEC” closely you would see an increase in enforcement actions in this area since new management took over. See, for example

Keeping the Brazilian stock exchange Brazilian?

Uma das decisões foi estabelecer o teto de 15% para a participação que um investidor poderá ter no capital da Bovespa ou da BM&F. Acima disso, apenas com autorização da CVM. Também passou a ser contemplada a possibilidade de Bolsas estrangeiras colocarem telas de negociação de seus ativos no país. Além disso, houve a regulamentação do mecanismo de ressarcimento de prejuízos, com teto de R$ 60 mil por investidor, destinado a pessoas que se sentirem prejudicadas por ações decorrentes ou omissão das pessoas autorizadas a operar no mercado.

One of the provisions [of CVM Instruction 461] was to set a 15% ceiling on the stake a single investor could take in the Bovespa or BM&F. More than that, only with authorization from the CVM.

Sentence fragment in the original.

It also contemplated the possibility of foreign exchanges installing trading screens for their assets in Brazil.

And what did it decide about that interesting question?

The Folha does not tell you.

I guess I will have to try and read that myself. I try to keep on these things. Some people collect stamps.

It also regulated the mechanism for reimbursing losses, with a ceiling of R$60,000 per investor and applying to persons who feel they have been damaged by falling share prices or culpable failures on the part of registered securities dealers.

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