CVM ORIENTING OPINION NO. 6, OF APRIL 28, 1980.

SUMMARY: Inquiry and administrative process instituted by the Securities and Exchange Commission (CVM). Interpretation of articles 1 and 2 of CMN Resolution No. 454/77, of the Monetary National Council. Purpose of the administrative inquiry: determination of facts. The notified parties of the opening of an administrative inquiry, whom CMN Resolution No. 454 denominates as 'indiciados' (indicated persons), are not accused of anything in this procedural phase. The accusation of practicing an illegal or inequitable act only arises in a subsequent eventual administrative process.

1. The matter addressed in this opinion concerns the meaning of the notification of the opening of an administrative inquiry by the CVM, which also implies the distinction between inquiry and administrative process, as well as the interpretation of provisions of CMN Resolution No. 454/77, of the Monetary National Council, which deal with the subject.

2. First, it is necessary to clarify the nature of the CVM's supervisory activity, which, under the terms of Article 9 of Law No. 6,385/76, is exercised, when it comes to investigating the materiality and authorship of facts that initially present characteristics of illegal acts or inequitable practices, through an administrative inquiry, whose procedure is, as it was, fixed by the Monetary National Council in the aforementioned CMN Resolution No. 454/77.

3. However, one must not lose sight of the fact that the inquiry does not correspond to an accusation against anyone, but is a simple procedure intended to ascertain facts whose illegal nature is presumed to exist.

4. Without this representing any judgment of value on the conduct of any person, Article 1 of Resolution 454/77, cited, determines that the CVM shall ascertain, through the institution of an inquiry, the occurrence of facts offensive to legal and regulatory norms whose observance it is responsible for safeguarding. Thus, the institution of the inquiry seeks, in this broad sense, the ascertainment of the truth.

5. In doing so, the CVM will send, in accordance with Article 2 of the same Resolution 454/77, notifications that mark the initial term of the inquiry, without making any pre-judgment on the conduct of those who are to be notified of the institution of the inquiry. The notification, in the CVM's understanding, has the sole objective of giving direct and confidential notice to the interested party of the beginning of the investigation, so that there is no surprise in the eventuality of an administrative process following the inquiry.

6. The CVM adopted, as became clear on several occasions, the recognition of the existence of an investigation phase, called inquiry, and a contradictory phase, which begins with the summons of those natural or legal persons whose responsibility for the illegal acts or inequitable practices effectively ascertained is to be verified, for the presentation of a defense.

CVM ORIENTING OPINION NO. 6, OF APRIL 28, 1980.

2

7. In the inquiry phase, in summary, the CVM only notifies those whom RESOLUTION NO. 454/77 designated as 'indiciados' (indicated persons); it is absolutely inaccurate any assumption that the notification presupposes the practice of illegal or inequitable acts by the indicated persons.

8. The opening of the inquiry, therefore, presupposes only the investigation of the occurrence of facts that may eventually constitute administratively punishable offenses and their authorship. If, then, there is no pre-definition even that the facts that are the object of the CVM's investigation have actually occurred or are effectively illegal or inequitable, one cannot understand, in this phase, that those who are notified of the institution of the inquiry have been accused of practicing such acts.

9. In synthesis, there is, in the inquiry, a simple investigation of facts and responsibility for their practice, if illegal. Nothing more, it does not yet deal with accusation, which will only arise in the eventual subsequent administrative process, being this one of the reasons why the law, wisely, determined the confidentiality of the investigations carried out by the CVM, which may, at the end, not result in an administrative process.

10. It is therefore impossible to claim to extrapolate from the circumstance that someone was merely notified of the institution of the inquiry, thereby assuming the condition that CMN Resolution No. 454/77 denominates as 'indiciado' (indicated person), more or less correctly, to thereby extract that they would have been immediately imputed, personally, the practice of illegal or inequitable acts, or even peremptorily affirmed that the facts have occurred.

11. It is worth recalling, in this regard, the lesson of doctrine that, as is obvious, there can only be an accused after the accusation. If, therefore, in the CVM's administrative inquiry the accusation is only formulated upon the preparation of the report by the person in charge of the inquiry, the assertion that individuals notified of the institution of the inquiry are accused of illegal acts (whose investigation, strictly speaking, is not even completed) is unfounded.

Signed original by
PAULO CÉZAR ARAGÃO
Legal Superintendent