CVM Instruction No. 388 of April 30, 2003 (Revoked)

CVM INSTRUCTION NO. 388, OF APRIL 30, 2003.

Provides for the activity of securities analyst and establishes conditions for its exercise.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM, makes public that the Collegiate Body, in a meeting held on this date, in view of the provisions of Art. 1, item VIII; 8, items I and III; 18, item I, letter "b", and 27 of Law No. 6,385, of December 7, 1976, as amended by Law No. 10,303, of October 31, 2001, RESOLVED to issue the following Instruction:

ON SCOPE AND PURPOSE

Art. 1 The exercise of the activity of securities analyst, by a natural person, is governed by the rules contained in this Instruction.

ON THE ACTIVITY

Art. 2 The activity of securities analyst consists of the professional evaluation of investment in securities, with the purpose of producing recommendations, monitoring reports, and studies for dissemination to the public, which assist in the investment decision-making process.

§1 The investment analyst activity referred to in this Instruction may be exercised, by a natural person, autonomously or with a link to an institution that is part of the distribution system, pension fund, insurance company, legal or natural person authorized by the CVM to perform the function of portfolio administrator, or any other entity authorized to operate by the CVM, Central Bank of Brazil, Secretariat of Complementary Pension and Superintendence of Private Insurance.

§2 To exercise their activity, the securities analyst must be registered with the CVM, in the manner provided for in Art. 10 of this Instruction.

ON THE ACCREDITATING ENTITY

Art. 3 The accreditation of securities analysts is hereby established, to be carried out by a national private law entity, non-profit, previously authorized by the CVM.

§1 The accrediting entity must:

I – possess a code of professional conduct and ethics;

II – monitor compliance by securities analysts with the code of professional conduct and ethics referred to in the previous item, applying the following penalties to offenders:

a) warning;

b) suspension of the accreditation referred to in the caput; and

c) cancellation of the accreditation referred to in the caput.

III – assess, through technical and ethical qualification exams, whether candidates have the adequate aptitude to exercise the activity of securities analyst, with the realization of each exam being preceded by CVM authorization; and

IV – keep on file all documents that prove compliance with the requirements contained in this Instruction, which must be forwarded to the CVM, if so requested, by written request.

§2 To grant the accreditation referred to in the caput, the entity must require the applicant to meet the following minimum requirements:

I – graduation in a higher education course, at an officially recognized institution, in the country or abroad;

II – unconditional adherence to the code of professional conduct and ethics as provided for in Art. 6 of this Instruction;

III – declaration, informing, under the penalties of the law:

a) that they are not disqualified from holding a position in financial institutions and other entities whose operation depends on authorization from the CVM or the Central Bank of Brazil, Superintendence of Private Insurance and Secretariat of Complementary Pension;

b) that they have not been criminally convicted, by a final and unappealable decision, except in the case of rehabilitation;

c) that they are not included in the Register of Issuers of Bounced Checks of the Central Bank of Brazil;

d) that they have not, in the last 5 (five) years, been an administrator of an entity subject to the control and supervision of the CVM, the Central Bank of Brazil, the Superintendence of Private Insurance or the Secretariat of Complementary Pension, which has had its authorization revoked or has been subject to bankruptcy, judicial reorganization, intervention, extrajudicial liquidation or submitted to a temporary special administration regime; and

e) whether they have been convicted, in the last 5 (five) years, for violation of the legislation of the CVM, Central Bank of Brazil, Secretariat of Complementary Pension and Superintendence of Private Insurance, specifying the respective nature;

IV – approval in the technical qualification exam referred to in item III of the previous paragraph.

§3 The accrediting entity must communicate to the CVM, within 5 (five) days:

I – the granting of accreditation, by electronic means, in the format established in the annex to this Instruction;

II – the existence of indications of violation of the code of professional conduct and ethics issued by the entity, as well as any applicable legal and regulatory norms for the securities analyst, in the exercise of their activity; and

III – the penalties applied due to violations of the code of professional conduct and ethics issued by the entity.

§4 For the purposes of compliance with item IV of § 2 of this article, approval in a qualification exam conducted abroad is admitted, provided that it is administered by an institution with which the Brazilian accrediting entity has signed a specific agreement for this purpose, with prior CVM authorization.

§5 From the application of penalties referred to in item II of § 1 of this article, an appeal may be filed to the CVM Collegiate Body.

ON CONDUCT RULES

Art. 4 The analyst must act in observance of the principles of probity and good faith, employing all care and diligence that they would expend in the analysis of securities for their own business, responsible for any infractions or irregularities that may be committed under their management.

Art. 5 In any analyses or recommendations disseminated in writing to the public, including via the worldwide computer network, the analyst must declare:

I – that their recommendations reflect solely and exclusively their personal opinions, and that they were prepared independently and autonomously, including in relation to the institution to which they are linked, if applicable;

II – if they maintain a link with any natural person who acts within the scope of the companies whose securities were the subject of analysis in the published report, clarifying the nature of the link;

III – if the institution to which they are linked, when applicable, as well as the funds, portfolios and investment clubs in securities administered by it, hold direct or indirect share participation equal to or greater than 1% (one percent) of the share capital of any of the companies whose securities were the subject of analysis in the published report, or are involved in the acquisition, alienation and intermediation of such securities in the market;

IV – if they are the holder, directly or indirectly, of securities issued by the company subject to their analysis, representing 5% (five percent) or more of their personal assets, or are involved in the acquisition, alienation and intermediation of such securities in the market;

V – if they or the institution to which they are linked receive remuneration for services rendered or present commercial relations with any of the companies whose securities were the subject of analysis in the published report, or natural or legal person, fund or universality of rights, that acts representing the same interest of this company; and

VI – if their remuneration or compensation scheme of which they are a member is tied to the pricing of any of the securities issued by companies analyzed in the report, or to the revenues from the business and financial operations carried out by the institution to which they are linked, if applicable.

Art. 6 Without prejudice to the provisions of the previous article, the code of professional conduct and ethics prepared by the accrediting entity must provide, at a minimum, on:

I – definition of potential situations of conflicts of interest in the exercise of the analyst activity;

II – manner of disclosure of situations that constitute a conflict of interest in the exercise of the activity, in any analyses or presentations made by the analyst;

III – commitment to seek honest and reliable information used in analyses, recommendations and presentations made by the analyst;

IV – duty of independence of the analyst, including, when applicable, in relation to the institution to which they are linked, regarding the issuance of recommendations on the application of resources for investment;

V – rules on trading with securities by the securities analyst; and

VI – the confidentiality to be observed by the securities analyst.

ON PROHIBITIONS

Art. 7 It is prohibited for the securities analyst:

I – issue recommendations with the purpose of obtaining, for themselves or others, undue advantage;

II – exercise their activity without complying with the provisions of §§ 1 and 2 of Art. 2, or in non-compliance with the rules applicable to them;

III – omit from their clients and the market information about the existence of a situation that characterizes a conflict of interest in the analysis of securities; and

IV - trade, in the period comprising the tenth business day preceding the public dissemination of investment analyses on a company and its securities until the fifth subsequent business day, inclusive, whether for their own portfolio or for third-party portfolios they manage, the respective securities that have been the object of their analysis.

Sole Paragraph. The prohibition set forth in item IV of this article applies to the institution to which the analyst may be linked, if the respective institution does not segregate the administration of third-party resources from the other activities of the institution.

ON THE RESPONSIBILITY OF THE ANALYST AND INSTITUTIONS PART OF THE DISTRIBUTION SYSTEM

Art. 8 The securities analyst, in the exercise of their activities, is responsible for the opinions issued in violation of the legal or regulatory rules applicable to them, without prejudice to the responsibility of the institution part of the distribution system to which they are linked, when applicable, resulting from omission in supervision or undue influence on the analyst's activity, in accordance with Art. 9 of this Instruction.

Art. 9 It is prohibited for institutions part of the distribution system to which the securities analysts may be linked, as well as for the companies subject to their analysis, to exercise any influence in the preparation of recommendations on the application of resources for investment, in order to reduce or remove their independence in the issuance of recommendations on the application of resources for investment.

ON THE REGISTRATION OF SECURITIES MARKET ANALYST

Art. 10. The CVM will grant the registration of securities market analyst to a natural person who is accredited by the accrediting entity referred to in Art. 3.

Sole Paragraph. The CVM may demand, at any time, proof of the declarations referred to in item III of § 2 of Art. 3, and in the case of a positive declaration regarding letter “e” of the respective item, the CVM may, at its discretion, deny the registration request.

Art. 11. The registration of securities market analyst must be requested, electronically, to the CVM by the interested party and will be issued by the Superintendence of Institutional Investor Relations within 30 (thirty) days, counted from the date of the request.

§1 If the period provided for in this article expires, in case there is no contrary manifestation by the CVM, and since all formalities provided for in this Instruction have been complied with, the registration request is presumed approved.

§2 The 30 (thirty) day period may be interrupted, only once, if the CVM requests additional information from the interested party, starting to run a new period of 30 (thirty) days counted from the date of compliance with the requirements.

§3 To meet the requirements, a period not exceeding 60 (sixty) days is granted, counted from the receipt of the respective correspondence, under penalty of denial of the request.

ON DENIAL OF THE REQUEST AND APPEAL

Art. 12. The denial of the securities market analyst registration request at the CVM must be communicated in writing to the interested party, through a reasoned decision, with all documents that instructed it being available to them.

Sole Paragraph. From the decision of the Superintendent who denies the registration request, an appeal may be filed to the CVM Collegiate Body, in accordance with the current regulation.

ON CANCELLATION AND SUSPENSION OF REGISTRATION

Art. 13. The registration of securities market analyst at the CVM may be cancelled, regardless of administrative inquiry, ensuring the analyst the right to full defense and due process:

I - if the falsity of the documents or declaration presented to obtain the registration is found; or

II - if, due to a supervening fact duly proven, it is evident that the person registered by the CVM no longer meets any of the requirements and conditions, established in this Instruction for accreditation before the accrediting entity and for the granting of the registration.

Art. 14. The CVM may suspend, or cancel, the registration referred to in this Instruction, at the request of the interested party.

§1 The suspension of the registration must be requested to the CVM, for a period not exceeding 12 (twelve) months, renewable at most twice.

§2 The CVM will communicate the suspension of the registration to the accrediting entity, which must exempt the analyst from the collection of any emoluments or fees during the suspension period.

§3 While the registration is suspended, the analyst will be prevented from exercising the activity, exonerating themselves from compliance with the obligations provided for in this Instruction, as well as tax obligations to the CVM.

ON INFORMATION

Art. 15. The securities analyst must communicate, electronically, to the CVM any change in registration data within 15 (fifteen) days, counted from the occurrence of the fact that justifies the alteration.

ON PENALTIES

Art. 16. It constitutes a serious offense, for the purposes of the provisions of Art. 11, § 3 of Law No. 6,385, of December 7, 1976:

I - obtaining registration at the CVM to exercise the activity of securities analyst based on false declarations or documents;

II - non-observance of the prohibitions established in Art. 7, items I, II, III and IV, and its sole paragraph, as well as that provided for in Art. 9;

III - non-compliance with the duties established based on item I of § 1 of Art. 3; and

IV – providing false declarations for the purposes of compliance with Art. 5 of this Instruction.

Art. 17. The securities analyst registered with the CVM who does not forward to the CVM the information provided for in this Instruction or who does not keep their registration updated, in accordance with Art. 15 of this Instruction, is subject to the cancellation of their registration at the CVM, without prejudice to the application of the penalties provided for in Art. 11 of Law No. 6,385, of 1976.

ON TRANSITIONAL PROVISIONS

Art. 18. The securities analyst will have a period of 1 (one) year, counted from the date of entry into force of this Instruction, to obtain their accreditation at the accrediting entity referred to in Art. 3 of this Instruction and their registration at the CVM.

Art. 19. The accrediting entity may, exceptionally, waive compliance with the requirement provided for in items I and IV of § 2 of Art. 3, provided that professional exercise of the analyst in the securities market for a minimum period of 2 (two) years, during the 5 (five) years immediately preceding the date of validity of this Instruction, is proven.

Art. 20. This Instruction enters into force 90 (ninety) days after the date of its publication in the Official Gazette of the Union.

Original signed by
LUIZ LEONARDO CANTIDIANO
President

ANNEX

SECURITIES ANALYST

NATURAL PERSON

I – REGISTRATION DATA

Name:
CPF:
(DDD) Telephone/Fax:
Residential address:
Neighborhood:
ZIP Code:
City:
State:
Mailing address, which will be public domain:
Neighborhood:
ZIP Code:
City:
State:
(DDD) Telephone/Fax
E-mail:

II – COMPLEMENTARY INFORMATION

Name and CNPJ of the Accrediting Institution:
When applicable, name and CNPJ of the institution with which they have a link: