CVM Resolution 538 (Repealed) - Administrative Sanctioning Processes

FULL TEXT OF CVM RESOLUTION NO. 538, OF MARCH 5, 2008, WITH THE CHANGES INTRODUCED BY CVM RESOLUTIONS NO. 552/08, 775/17 AND 780/17.

Provides for administrative sanctioning processes.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION – CVM makes public that the Collegiate Board, in a meeting held on February 20, 2008, in accordance with the provisions of art. 8, item I, of Law No. 6,385, of December 7, 1976, RESOLVED to issue the following Resolution:

CHAPTER I - SCOPE AND PURPOSE

Art. 1. This Resolution provides for the procedures to be observed in the processing of administrative sanctioning processes instituted by the CVM, for the purposes of the provisions of art. 9, items V, VI and § 2, of Law No. 6,385, of December 7, 1976.

CHAPTER II – INVESTIGATION

Section I – General Provisions

Art. 2. The indications of illegal acts or violations of regulation and inequitable practices in the securities market shall be investigated through administrative inquiries.

§ 1. It shall be the responsibility of the Superintendency whose area of activity is related to the indications of irregularity to be investigated to submit a proposal for the institution of an administrative inquiry, addressed to the General Superintendent.

§ 2. When any of the CVM Superintendencies considers that it has conclusive elements regarding the authorship and materiality of the irregularity found, which allow for the formulation of an accusation without the need for the institution of an administrative inquiry, it shall formulate an accusation term, which shall not depend on prior approval by the General Superintendent.

§ 3. The General Superintendent may determine that the Superintendencies draft an accusation term when the proposal for the institution of an administrative inquiry contains sufficient elements of authorship and materiality of the offense.

Section II – Administrative Inquiry

Subsection I – Institution

Art. 3. It is the responsibility of the General Superintendent to determine the institution of an administrative inquiry to investigate illegal acts or violations of regulation and inequitable practices in the securities market, in the manner provided for in art. 9, item V and paragraph 2, of Law No. 6,385/76.

Sole paragraph. The administrative inquiry shall be considered instituted on the date of the Ordinance of the General Superintendent that provides for its institution.

Art. 4. The investigation work must be concluded within 90 (ninety) days from the date of institution of the administrative inquiry, and such period may be extended, upon motivated request sent to the General Superintendent, for a period that he deems adequate for the conclusion of the investigations.

Subsection II – Report

Art. 5. The administrative inquiry shall be conducted by the Sanctioning Processes Superintendency – SPS together with the Specialized Federal Prosecutor’s Office – PFE.

Art. 6. Except for the case provided for in art. 7, the SPS and PFE shall prepare a report, which must contain:

I – name and qualification of the accused; II – narrative of the facts investigated that demonstrate the materiality of the infractions found; III – analysis of authorship of the infractions found, containing the individualization of the conduct of the accused, making express reference to the evidence that demonstrates their participation in the infractions found; IV – the legal or regulatory provisions infringed; and V – proposal for communication referred to in art. 10, if applicable.

• Items IV and V with wording given by CVM Resolution No. 775, of July 10, 2017.

VI – the indication of the procedure to be observed in the administrative sanctioning process.

• Item VI included by CVM Resolution No. 775, of July 10, 2017.

Subsection III – Archiving

Art. 7. The SPS and PFE shall propose to the General Superintendent the archiving of the administrative inquiry whenever they do not obtain sufficient evidence to formulate the accusation or if they are convinced of the non-existence of an offense or the occurrence of the statute of limitations.

Section III – Accusation Term

Art. 8. The accusation term shall be drafted by any of the CVM Superintendencies when the elements of authorship and materiality of the offense are sufficient for its offering.

§ 1. The administrative process shall be considered instituted with the notification of the accused to present a defense, in accordance with art. 13 of this Resolution.

§ 2. The accusation term must contain the elements referred to in art. 6 of this Resolution.

Art. 9. Before the notification of the accused to present a defense, the PFE shall issue an opinion on the accusation term, within a period of 30 (thirty) days from the date of the accusation term, with the following scope:

I – objective analysis of the observance of the requirements of art. 6; II – examination of the compliance with art. 11; and III – examination of the adequacy of the procedure adopted for the administrative sanctioning process.

Sole paragraph. The Superintendency that has offered the accusation term may, considering the opinion of the PFE, archive the process.

• Art. 9 with wording given by CVM Resolution No. 775, of July 10, 2017.

Section IV – Communications to Other Bodies and Entities

Art. 10. It is the responsibility of the General Superintendent to effect communications:

I – to the Public Ministry, when the occurrence of a crime defined by law as a public action, or indications of the practice of such crimes, is verified; and II – to other bodies and entities of the public administration, when the occurrence of an offense in an area subject to their supervision, or indications of its practice, is verified.

Sole paragraph. The PFE shall issue an opinion on the communication to the Public Ministry and on any other proposals for communication.

Section V – Prior Manifestation of the Investigated

Art. 11. To formulate the accusation, the Superintendencies and the PFE must have taken steps to obtain from the investigated party clarifications on the facts described in the report or in the accusation term, as the case may be.

Sole paragraph. The provision of the caput shall be considered met whenever the accused:

I – has given personal testimony or voluntarily manifested regarding the acts imputed to him; or II – has been notified to provide clarifications on the acts imputed to him, even if he does not do so.

CHAPTER III – ACCUSATION

Art. 12. The Superintendencies shall send the records to the Coordination for Control of Administrative Processes – CCP, which shall arrange for the notification of the accused to present a defense.

Art. 13. The accused shall be notified, in writing, to present a defense within a period of 30 (thirty) days, counted from the date of notification.

§ 1. The period referred to in the caput shall be computed in double when the accused have different attorneys.

§ 2. The accused must present his defense, in writing, addressed to the President of the CVM, accompanied by the documents on which he bases his defense.

§ 3. If the period mentioned in the caput expires without the presentation of a defense, the CVM shall be legitimized to apply to the accused the penalties provided for in Law No. 6,385/76.

§ 4. The notification must contain the warning that the accused may propose the celebration of a commitment term, in accordance with the provisions of art. 11, § 5, of Law No. 6,385/76, except when investigating irregularities related to Law No. 9,613, of March 3, 1998.

§ 5. The Superintendency that formulated the accusation shall be competent to resolve any incidents related to the realization of the notification, as well as to grant requests for extension of the period for presenting defenses.

CHAPTER IV - ACTS PREVIOUS TO JUDGMENT

Section I – Appointment of Rapporteur

Art. 14. After the presentation of the defenses, the records shall be sent to the Collegiate Board, for the drawing of a Director, who shall act as Rapporteur.

• Caput with wording given by CVM Resolution No. 780, of September 4, 2017.

§ 1. If one or more accused present a proposal for a commitment term, the records shall only be sent to the Collegiate Board after the appreciation of the proposal by the Committee on Commitment Terms referred to in art. 8 of CVM Resolution No. 390, of May 8, 2001.

§ 2. The appointment of a Rapporteur shall only occur if the process is not suspended due to the celebration of a commitment term.

§ 1. In the event that all accused present proposals for Commitment Terms, they shall be appreciated in the records of the Administrative Sanctioning Process and the appointment of a Rapporteur shall only occur if the process is not suspended due to the celebration of Commitment Terms with all proposers.

§ 2. If only part of the accused presents a proposal for a Commitment Term, it shall be appreciated in a separate process from the Administrative Sanctioning Process, which shall continue with respect to the other accused.

• Paragraphs 1 and 2 with wording given by CVM Resolution No. 552, of November 4, 2008.

Art. 15. Upon the definitive departure of the Rapporteur, the administrative processes under his rapporteurship shall be grouped in chronological order and redistributed by lottery, provisionally, in equal quantities, to the other Directors.

• Art. 15 with wording given by CVM Resolution No. 780, of September 4, 2017.

Art. 16. The Director who assumes the vacant position shall, in a definitive manner, except in the case of impediment, have the condition of Rapporteur of the processes attributed to his predecessor.

• Art. 16 with wording given by CVM Resolution No. 780, of September 4, 2017.

Art. 17. In the case of impediment of the new Director, the Director designated in the manner of art. 15 shall remain as Rapporteur of the administrative processes, in a definitive manner, compensating for such occurrence in future distributions.

• Art. 17 with wording given by CVM Resolution No. 780, of September 4, 2017.

Section II – Rectification of the Accusation

Art. 18. The Rapporteur shall return the records to the Superintendency that formulated the accusation, to remedy irregularities, if the accusatory instrument has not observed the provisions of:

I - in art. 6, items I to IV; or II - in art. 11, and, furthermore, if no defense has been presented.

§ 1. After the irregularity is remedied, the Superintendency shall complement the report or the accusation term, as the case may be, if it considers that the measures adopted influence the description referred to in items II and III of art. 6.

§ 2. The Superintendency or the PFE may propose to the Collegiate Board the archiving of the process if, after adopting the measures referred to in § 1, it concludes that there is no offense.

§ 3. In any case, the accused shall be notified to present a new defense, proceeding in accordance with the provisions of art. 12.

Section III – Carrying Out of Diligences for Production of Evidence

Art. 19. It is up to the Rapporteur to decide on the request for evidence formulated in the defense of the accused, as well as to preside over the diligences necessary for its production, if granted.

Art. 20. It is optional for the Rapporteur to determine the carrying out of diligences, in addition to those possibly requested by the accused.

Art. 21. The diligences, when necessary, may be carried out by any of the Superintendencies or by the PFE, at the discretion of the Rapporteur.

Art. 22. From the decision of the Rapporteur that denies a request for diligence formulated by the defense, an appeal shall lie separately to the Collegiate Board, by petition presented within a period of 5 (five) days from the knowledge of the decision of the Rapporteur.

Art. 23. The accused, according to the type of evidence to be produced, shall be informed of the date and place where it will be collected, so that he may, if he wishes, personally or through his legal representative, accompany its production.

Art. 24. The accused shall be granted a period of 15 (fifteen) days to manifest regarding the evidence produced, regardless of whether he accompanied its production or not.

Section IV – New Legal Definition of the Fact

Art. 25. The Collegiate Board may give the fact a different legal definition than that contained in the accusatory instrument, even as a result of evidence not mentioned therein, but existing in the records, indicating the accused affected by the new legal definition and determining the notification of such accused to amend their defenses, within a period of 30 (thirty) days from the receipt of the notification, allowing the production of new evidence, observing the provisions of Section III.

Art. 26. In the case of art. 25, all accused indicated by the Collegiate Board shall be notified, and the notification must be accompanied exclusively by the minutes containing the decision of the Collegiate Board.

CHAPTER V – JUDGMENT

Art. 27. The process shall be judged by the Collegiate Board, in a public session, convened with at least 15 (fifteen) days in advance, and access by third parties may be restricted due to the public interest involved.

Art. 28. The session shall be presided over by the President of the CVM or, in his absence or impediment, by any Director, and shall only take place with the presence of at least 3 (three) members of the Collegiate Board.

Art. 29. The Rapporteur may, at his discretion, make the process report available to the parties and the other members of the Collegiate Board before the judgment session, in which case he shall be exempt from reading the report in said session.

Art. 30. The accused or his legal representative shall be granted a maximum period of 15 (fifteen) minutes, extendable, at the discretion of the President of the session, by another 15 (fifteen) minutes, to proceed with the oral defense of the defense, after the reading of the Report by the Rapporteur, observing the provisions of art. 29.

Art. 31. After the oral defense of the defense, it shall be optional for the PFE to manifest orally.

Sole paragraph. If the PFE manifests, the defense shall have a new opportunity to pronounce itself on the subject of such manifestation.

Art. 32. In the appreciation of evidence, which may be all those admitted in Law, the Collegiate Board shall form its free conviction.

Art. 33. If there is a need to clarify controversial points, the Collegiate Board may withdraw from the session for its examination, or postpone the judgment.

Art. 34. The Collegiate Board may, at the request of any of the parties, formulated based on a reasonable justification, postpone the judgment.

Art. 35. In the judgment session, each member of the Collegiate Board shall have one vote.

Sole paragraph. The deliberations shall be taken by the majority vote, with the President of the session having the casting vote.

Art. 36. The decision to be issued shall contain the report of the process, the grounds, the conclusion and the penalties applied, if applicable.

CHAPTER VI - APPEAL

Art. 37. From the decision issued by the Collegiate Board, knowledge shall be given, in writing, to the accused, so that, if he wishes, in a petition sent to the CVM, he may file an appeal, total or partial, to the Council of Resources of the National Financial System, within a period of 30 (thirty) days, from the knowledge of the decision.

§ 1. In processes dealing with irregularities related to Law No. 9,613/98:

I – the period for filing appeals shall be 15 (fifteen) days; and II – the appeal shall be addressed to the Minister of State for Finance.

§ 2. The provision of item I of § 1 also applies to processes dealing with irregularities related to Law No. 10,214, of March 27, 2001.

Art. 38. The appeal to the Council of Resources of the National Financial System shall have suspensive effect.

CHAPTER VI-A - ADMINISTRATIVE SANCTIONING PROCESS OF SIMPLIFIED PROCEDURE

Section I – Acts Previous to Judgment

Art. 38-A. The administrative sanctioning process relating to the infractions provided for in Annex 38-A of this Resolution, which, due to their level of complexity, do not require ordinary evidentiary production, shall be subject to the simplified procedure.

§ 1. If the Superintendent opts to institute a single procedure to investigate an offense covered by Annex 38-A of this Resolution, and an offense of another nature, the administrative sanctioning process must observe the ordinary procedure provided for in this Resolution.

§ 2. The administrative inquiries and their developments must observe the ordinary procedure provided for in this Resolution.

Art. 38-B. After the presentation of the defenses, the records shall be sent to the Superintendency that formulated the accusation, which must prepare, within a period of 60 (sixty) days from the receipt of the records, a report containing:

I – the summary of the accusation and the defense; II – the record of the main occurrences that took place in the progress of the process; and III – analysis of the Superintendency regarding the arguments of defense and the merit of the accusation.

§ 1. Once the report referred to in this article is prepared, the records shall be made available to the accused for a period of 15 (fifteen) days from his knowledge or notification, after which, with or without manifestation, the process shall follow the procedure established in art. 14 of this Resolution.

§ 2. The period referred to in § 1 shall be computed in double when the accused have different attorneys.

§ 3. Without prejudice to the provision of the preceding paragraph, the period referred to in § 1 may be exceptionally extended by the Superintendency, for an equal period, upon a duly justified request presented by the accused, in which the impossibility of its compliance is justified.

§ 4. Within 30 (thirty) days from its receipt, the Rapporteur shall return the records to the Superintendency that formulated the accusation, for complementation, if the report has not observed the provisions of this article.

Section II – Judgment

Art. 38-C. The Rapporteur must convene a public session for the judgment of the process within a maximum period of 120 (one hundred and twenty) days from its distribution.

Art. 38-D. The Rapporteur may, at his discretion, adopt the report referred to in art. 38-B.

Art. 38-E. In the judgment session, the members of the Collegiate Board may ground their vote by referring to the reasons exposed in the report referred to in art. 38-B.

Art. 38-F. The decision to be issued shall contain, at minimum, the report, which may be that referred to in art. 38-B, the conclusion and the penalties applied, if applicable.

Art. 38-G. The provisions of this Resolution regarding the ordinary procedure shall apply subsidiarily to the procedure provided for in this Chapter.

• Chapter VI-A included by CVM Resolution No. 775, of July 10, 2017.

CHAPTER VII - FINAL PROVISIONS

Art. 39. The decision issued, regardless of whether there is an appeal or not, shall be disclosed to the press and published in the Official Gazette of the Union in the form of a summary that contains its grounds, the identification of the parties and the penalties applied.

Art. 40. Except for the cases provided for in arts. 13, 26 and 37 of this Resolution, the communication of the acts and procedural terms shall be made by publication in the Official Gazette of the Union, which shall contain the indispensable elements for the knowledge of the interested party and his attorney.

Art. 41. The periods mentioned in this Resolution shall be continuous, excluding the day of start and including the day of expiration.

Art. 42. The periods only start or expire on a normal business day of the CVM.

Art. 43. Upon request, in accordance with CVM Resolution No. 481, of April 29, 2005, the records shall be made available to the accused or his legal representative, in the premises of the CVM, as well as a copy of the process.

Art. 44. The provisions of arts. 6 and 40 of this Resolution shall apply to the summary procedure administrative processes provided for in CVM Instruction No. 251, of June 14, 1996.

• Art. 44 revoked by CVM Resolution No. 775, of July 10, 2017.

Art. 45. This Resolution enters into force on the date of its publication, applying immediately to pending processes, safeguarding the validity of acts practiced before its effectiveness.

Art. 46. CVM Resolutions No. 457, of December 23, 2002, 470, of July 22, 2004, 490, of October 18, 2005, 504, of May 12, 2006, 514, of December 19, 2006, and 523, of July 13, 2007, and art. 2 of CVM Resolution No. 486, of August 17, 2005, are hereby revoked.

Signed original by

MARIA HELENA DOS SANTOS FERNANDES DE SANTANA President

Annex 38-A

Art. 1. The following hypotheses are considered low-complexity infractions:

I – the administrator of securities portfolios fails to observe the deadlines for presenting periodic information provided for in the norm that provides for the administration of securities portfolios;

II – the administrator of companies benefiting from resources originating from tax incentives and, when applicable, the liquidator, the judicial administrator, the judicial manager, the intervenor or similar figure, fails to observe the deadlines for presenting periodic and eventual information provided for in the norm that provides for the registration of companies benefiting from resources originating from tax incentives, except for the case of communication on relevant act or fact, as established in specific norm;

III – the administrator of companies benefiting from resources originating from tax incentives and, when applicable, the liquidator, the judicial administrator, the judicial manager, the intervenor or similar figure, fails to prepare periodic and eventual information provided for in the norm that provides for the registration of companies benefiting from resources originating from tax incentives, except for the case of communication on relevant act or fact, as established in specific norm;

IV – the administrator of issuers of securities, the legal representative of the foreign issuer and, when applicable, the liquidator, the judicial administrator, the judicial manager, the intervenor or similar figure, fails to observe the deadlines for presenting periodic and eventual information provided for in the norm that provides for the registration of issuers of securities admitted to trading in regulated securities markets, except for the cases of communication on relevant act or fact, as establishe

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