Resolution of the Deputy Superintendent SMV

No. 034-2024-SMV/10

Lima, 21 June 2024

Summary: Scotia Fondos Sociedad Administradora de Fondos Mutuos S.A. is sanctioned with a fine amounting to three (3) UIT, equivalent to S/12 900.00 (Twelve thousand nine hundred and 00/100 Soles) for having incurred one (1) serious infraction typified in Annex VII, numeral 2, subparagraph 2.8 of the Sanctions Regulation, for having made non-permitted investments in the name of the fund under its administration.

Administrated
: Scotia Fondos Sociedad Administradora de Fondos Mutuos S.A Subject :
Administrative sanctioning procedure
File No. : 2024020996

The Deputy Superintendent of Prudential Supervision

VIEWS:

Administrative file No. 2024020996, Report No. 769-2024-SMV/10.3, issued by the General Intendancy of Prudential Compliance, as well as the defenses presented by Scotia Fondos Sociedad Administradora de Fondos Mutuos S.A.; and,

CONSIDERING:

1. In accordance with Article 1 of Law No. 29782, Law for the Strengthening of the Supervision of the Securities Market, the name of the National Supervisory Commission of Companies and Securities (CONASEV) is replaced by that of the Superintendency of the Securities Market (SMV), so that any reference to CONASEV in legal norms shall be understood as made to the SMV;

I. Facts

2. Through Report No. 1222-2020-SMV/10.2, the General Intendancy of Supervision of Entities (hereinafter, IGSE) communicated to the General Intendancy of Prudential Compliance the indications of possible infractions by Scotia Fondos Sociedad Administradora de Fondos Mutuos S.A. (hereinafter, SCOTIA SAFM);

3. As a result of the evaluation of said indications of infraction and under the provisions of the Single Ordered Text of the General Administrative Procedure Law, Law No. 27444, approved by Supreme Decree No. 004-2019-JUS (hereinafter, TUO DE LA LPAG), the General Intendancy of Prudential Compliance, through Official Letter No. 1965-2024-SMV/10.3, notified on 8 May 2024 (hereinafter, OFFICIAL LETTER OF CHARGES), formulated charges against SCOTIA SAFM for infractions to the Regulation of Mutual Funds of Investment in Securities and their Administrating Companies, approved by CONASEV Resolution No. 068-2010- EF/94.01.1 and its amendments (hereinafter, REGULATION);

4. On 17 May 2024, SCOTIA SAFM presented its defenses to the observations made;

5. The charges formulated against SCOTIA SAFM, as well as the defenses of the latter and their evaluation have been subject to analysis in Report No. 769-2024-SMV/10.3, which has been submitted to the knowledge of this Deputy Superintendency;

6. In observance of the Principle of Due Process contemplated both in Article IV, numeral 1.2, of the Preliminary Title and in article 248, subparagraph 2, of the TUO LPAG, through Official Letter No. 2460-2024-SMV/10, it was made available to SCOTIA SAFM;

II. Issues to be determined

7. In the present administrative procedure, in the opinion of this Deputy Superintendency of Prudential Supervision, it corresponds to determine the following:

a. Whether or not SCOTIA SAFM incurred an infraction provided in Annex VII, numeral 2, subparagraph 2.8 of the Sanctions Regulation, approved by SMV Resolution No. 035-2018-SMV/01 (hereinafter, SANCTIONS REGULATION), for having made non-permitted investments in the name of the fund under its administration;

b. Whether or not it corresponds to impose a sanction on SCOTIA SAFM;

III. Analysis

3.1 Applicable regulations

8. On the matter, it should be taken into account that article 121 of the REGULATION provides the following:

“Article 121.- Excesses and Investments not provided for by causes attributable For the purposes of Article 251 of the Law, it is understood that excesses and investments not provided for in the investment policy of the mutual fund occur due to causes attributable to the administrating company, when they originate directly from the management of the administrating company itself. Excesses or investments not provided for in the investment policy that occur due to causes attributable to the administrating company must be corrected no later than the next business day after occurrence, otherwise they must be disclosed as a material fact clearly indicating the condition attributable to the management of the administrating company.

Notwithstanding this, before duly justified reasons by the administrating company, before the line organ of CONASEV this excess or investment not provided for must be regularized within a maximum period of six (6) months, counted from the beginning of the excess or investment not provided for (…).

The administrating company must restore to the mutual fund and to the corresponding participants any damage caused by the excesses or investments not provided for in the investment policy of the mutual fund. Damage is considered the negative result product of the difference between the liquidation or sale amount of the investment and the higher value recorded in its valuation during the stage of the excess or of the investment not provided for in the investment policy of the mutual fund.

(…)”.

9. In this regard, article 113 of the REGULATION establishes the following:

“Article 113.- Investment in deposits in financial entities abroad and instruments representative of these

The investment in deposits in companies of the financial system constituted abroad, as well as in instruments representative of these, to which subparagraph d) of article 249 of the Law refers, shall be permitted investments for mutual funds when the financial entity in which the deposit is made or issuer of the instruments representative of these complies with the following conditions:

a) It is constituted in a country that complies with the criteria established in subparagraph a) of ANNEX I; and,

b) It is under the supervision of an entity of similar competence to the Superintendency.”

10. Likewise, Annex I, literal a), of the REGULATION provides:

“Annex I

CONDITIONS FOR INVESTMENT ABROAD

a) The States referred to in subsection a) of article 114 of the Regulation must jointly comply with the following:

(…)

3) Not be included in the EU List of non-cooperative jurisdictions for tax purposes; and,

(…)”.

3.2 Charge

11. On 25 February 2020, the European Union updated the list of non-cooperative jurisdictions for tax purposes (hereinafter, LIST), including, among other countries, Panama and Cayman Islands. As a result, as of that date, mutual funds may not make investments in deposits in companies of the financial system, or instruments representing them, incorporated in Panama, Cayman Islands, and the other countries on the LIST;

12. From the review of the investment portfolio of SCOTIA SAFM, the SMV observed that, on 13 May 2020, the management company made, on behalf of the mutual fund named SF Deposito Disponible $ FMIV (hereinafter, FUND), the purchase of 4,000 certificates of deposit, with security code XS1966747484, issued by Bancolombia Panama;

13. In that regard, taking into account that the issuer Bancolombia Panama is incorporated in Panama, a country included in the LIST, the investment in the aforementioned certificates of deposit is considered not permitted and not provided for in the investment policy, in accordance with the provisions of article 113, subsection a), and Annex I, literal a), numeral 3), of the REGULATION. In addition to this, because the investment made by SCOTIA SAFM on behalf of the FUND was made after the update of the LIST, it is considered attributable to the management of the management company, and therefore should have been remedied no later than the next business day after it occurred, in accordance with article 121 of the REGULATION;

14. By means of Official Letter No. 3165-2020-SMV/10.21 notified on 14 September 2020, SCOTIA SAFM was informed, among other things, that through the transaction of 13 May 2020 it would have made, on behalf of the FUND, non-permitted investments, considered attributable to the management of the management company. In that regard, it was requested to immediately remedy such non-permitted investments;

15. In response to Official Letter No. 3165-2020-SMV/10.2, on 23 September 2020, SCOTIA SAFM stated that the FUND's investment in certificates of deposit issued by Bancolombia Panama, with transaction date 13 May 2020, originated as a result of a cross transaction between the FUND and the mutual funds SF Cash $ FMIV and SF Premium $ FMIV. The management company added that, due to a material operational error recorded in the system, at the time of acquisition of the securities, it was not noticed that the certificates of deposit were outside the FUND's investment policies;

16. Likewise, SCOTIA SAFM reported that, on 16 September 2020, the sale of the certificates of deposit issued by Bancolombia Panama was carried out; and stated that the cross transaction of 13 May 2020 and the sale transaction of 16 September 2020 were carried out without generating harm to the FUND's participants;

17. Therefore, it was imputed that SCOTIA SAFM would have incurred one (1) infraction classified as serious, according to Annex VII, numeral 2, subsection 2.8 of the SANCTIONS REGULATION, which establishes as an infraction of a serious nature “To carry out with the fund's resources operations or investments not permitted, or to carry them out without observing the provisions of the regulations”.;

3.4 Defenses

18. By means of the brief submitted on 17 May 2024, SCOTIA SAFM states that it expressly acknowledges its responsibility for the imputed infraction, declaring that the actions carried out, objectively, constitute conduct classifiable as an infraction;

19. Additionally, SCOTIA SAFM declares that it carried out the sale of the FUND's non-permitted investment on 16 September

[1] With File No. 2020032535.

of 2020, that is, prior to the start of the administrative sanctioning procedure;

20. Likewise, it indicates that it will provide all its collaboration so that this administrative procedure concludes without generating any administrative or other cost to the regulator and in safeguarding the integrity of the market;

21. Additionally, SCOTIA SAFM states that its risk and investment areas have carried out a series of necessary measures to prevent this type of situation from occurring in the future, which are detailed within the framework of the development of the sanction criteria;

On the application of the sanction criteria

22. In order for the SMV to evaluate a possible administrative sanction proportionally, SCOTIA SAFM analyzes each of the Sanction Criteria established in the Sanctions Regulation, which must be applied according to the Principle of Reasonableness contemplated in numeral 3) of article 248° of the TUO OF THE LPAG, which establishes that the sanction to be applied must be proportional to the non-compliance classified as an infraction. Thus, it details the following:

23. Regarding recidivism, SCOTIA SAFM states that, although it has a record of sanctions resulting from certain infractions of a minor and serious nature linked mainly to the late submission of occasional and/or periodic information, among other cases, during 2019, SCOTIA SAFM was not sanctioned by the SMV through a final resolution for the commission of the same infraction imputed in the CHARGE OFFICIAL LETTER, and therefore does not have the status of recidivist;

24. Regarding the circumstances of the commission of the sanction, SCOTIA SAF indicates that it was aware that investments in certificates of deposit issued by financial institutions in Panama were not a permitted investment for its mutual funds, whereas, on 25 February 2020, the European Union updated the LIST, a situation that was also communicated as a material fact on 26 February 2020, after having become aware that Panama ceased to be a country in which mutual funds could make permitted investments;

25. SCOTIA SAFM indicates that, on 09 January 2020 (when Panama was not considered within the LIST), on behalf of the mutual funds Scotia Fondo Cash $ FMIV and Scotia Fondo Premium $ FMIV, it purchased 4,000 Certificates of Deposit of Bancolombia Panama from Larraín Vial Chile (the Certificates). The management company specifies that, when registering said operation in its systems, the issuer was recorded under the issuer name "Bancolombia", and not "Bancolombia Panama" due to an operational error, a situation that caused the subsequent cross-purchase operation of the Certificates by the FUND on 13 May 2020 to not be detected or alerted in time by its risk and investment area;

26. It adds that, as of the date of its brief, the personnel responsible for registering the issuer's name in the system have already been trained so that situations such as the one presented do not occur again;

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27. It reiterates that the acquisition of the Certificates on 13 May 2020 was the product of an involuntary error in the registration of the issuer in the system, which affected its limit control system; in that sense, it specifies that said operation would not have been carried out had said operational error not occurred;

28. SCOTIA SAFM specifies that, so far in the period of detection of the infraction, carried out through Oficio N°3165-2020 up to the date of the brief, it has carried out the review of processes and the updating of manuals in relation to the activities of the investment team, as well as the training of personnel regarding the regulatory treatment applicable to the investment limits of the mutual funds it manages;

29. Additionally, it adds that within its second quarter of 2024 it will implement additional verification measures within its investment area that will allow identifying the creation data of the issuer and instruments prior to negotiation, which will be compared with the system's database, public sources, and documentation provided by the issuers themselves. Likewise, it points out that, in its risk area, additional procedures will be developed in order to include in its line review the daily verification of the information of the funds system vs. that of Refinitiv Eikon, and to be able to provide the corresponding alerts for the immediate correction of the investment area;

30. The management company requests that the SMV consider that SCOTIA SAFM sought and seeks to act in accordance with current regulations and that the infraction it may have committed, as in this case, is the product of unintentional conduct and without malice;

31. Regarding the economic harm caused and its repercussion on the market, it specifies that, once the presence of the non-permitted investment in the FUND was noticed, communicated through Oficio N°3165-2020-SMV/10.2 dated 13 September 2020, it immediately proceeded to correct said error by selling the 4,000 Certificates of Deposit of Bancolombia Panama on 16 September 2020;

32. Likewise, it specifies that the purchase of the aforementioned Certificates by the FUND did not generate any harm to the participants of the funds involved, nor to the market, since they were made at market value, provided by the price provider;

33. Regarding the repercussion on the market, it is specified that the non-permitted investment, as well as the omission of its correction and communication as a material fact, has not produced a concrete quantifiable harm to the market, nor has it affected in a concrete manner, or caused economic damage to real or potential investors;

34. Regarding the illicit benefit resulting from the commission of the infraction, SCOTIA SAFM reports that the making of the non-permitted investment has in no way generated any illicit economic benefit, directly or indirectly, nor benefit of any other kind;

35. Regarding the probability of detection of the infraction, SCOTIA SAFM specifies that the probability of detection of the infraction was high, because no greater evaluation was required than to identify that the country of incorporation of Bancolombia Panama (Panama) was within the LIST, whereas the same management company had communicated on 26 February 2020 that several of its mutual funds held investments in issuers with country of origin Panama, which were subsequently corrected. This shows that SCOTIA SAFM did not carry out any irregular conduct with intentionality or intent to conceal the infraction;

36. It adds that the fact of showing its express acknowledgment of the infraction committed shows its null intention to conceal or sustain any irregular conduct;

37. Regarding the severity of the damage to the public interest and/or protected legal interest, it indicates that, since the SMV would have warned of the commission of the infringement, through Official Letter No. 3165-2020, SCOTIA SAFM has shown its willingness to comply with the provisions of the regulator, carrying out the corresponding correction of the investment in the FUND, in order to avoid any affectation to the public interest and/or the protected legal interests in the REGULATION;

38. In that sense, it points out that, within the framework of the infringement committed, there is no serious damage or harm against the participants of the FUND, in the context of the acquisition of the Certificates;

39. Regarding the criterion referred to the existence or not of intentionality in the conduct of the infringer, it warns that its conduct has not been carried out with intentionality or malice, on the contrary, it indicates that it complied with attending to all communications from the regulator and with the corresponding correction, detailing and specifying that the infringement was the product of an involuntary operational error;

On the sanction

40. Based on the foregoing, without prejudice to the acknowledgment of responsibility, taking into account the sanction criteria analyzed, and in respect for the principle of due process provided in article IV of the TUO of the LPAG, SCOTIA SAFM requests that the provisions of the last paragraph of article 25 of the Sanctions Regulation be taken into account, and a sanction provided for minor infractions be imposed;

On the application of mitigating circumstances of responsibility

41. For the express and written acknowledgment of responsibility, made within the term granted for the presentation of defenses in the framework of this administrative sanctioning procedure, as established in subsection 1) of literal a) of article 26 of the Sanctions Regulation; SCOTIA SAFM requests that the express acknowledgment of responsibility be deemed presented, and that it be resolved with the considerations set forth;

3.5 Evaluation of the defenses

42. This analysis must begin by stating that SCOTIA SAFM, availing itself of article 26 of the SANCTIONS REGULATION, has expressly acknowledged its responsibility in the imputed infringement, declaring that the actions carried out, objectively, constitute conduct qualifying as an infringement; and, specifying that, due to an operational error, when registering the operation subject to observation in its systems, the issuer was recorded under the issuer name “Bancolombia”, and not “Bancolombia Panamá”. It should be mentioned that said acknowledgment will be taken into consideration at the time of evaluating the sanction to be imposed;

43. Notwithstanding the foregoing, it is necessary to point out that SCOTIA SAFM is a company supervised by the SMV, with authorization to operate granted by Resolution CONASEV No. 159-98-EF/94.10 of 24 November 1998, and it is aware of the regulations under which mutual investment funds operate, and must comply with the REGLAMENTO, which determines the investments permitted for mutual funds;

44. Nevertheless, it has been established that SCOTIA SAFM made non-permitted investments on behalf of the FONDO, on 13 May 2020, with the acquisition of the deposit certificates issued by Bancolombia Panama, in accordance with the provisions of article 113, subparagraph a), and in Annex I, literal a), numeral 3), of the REGLAMENTO. Likewise, it has been established that it breached the provisions of article 121 of the REGLAMENTO, since said investments were not remedied on the day following their occurrence and were not disclosed as a material fact clearly indicating the condition attributable to the management of the administering company;

45. On the other hand, it should be noted that the evaluation of what was mentioned by SCOTIA SAFM in relation to the sanction criteria, the criteria of reasonableness and proportionality, as well as in relation to the mitigating circumstances of the sanction, will be considered at the time of evaluating the sanction to be imposed;

46. Consequently, SCOTIA SAFM has incurred the infraction classified as serious as typified in Annex VII, numeral 2, subparagraph 2.8 of the REGLAMENTO DE SANCIONES, which establishes as an infraction of a serious nature “To carry out with the fund's resources operations or investments that are not permitted, or to carry them out without observing the provisions of the regulations”;

IV. Evaluation of the sanction

47. In accordance with article 344 of the Single Ordered Text of the Securities Market Law, Legislative Decree No. 861; and its amendments, approved by Supreme Decree No. 020-2023-EF (hereinafter, LMV), article 25 of the REGLAMENTO DE SANCIONES, in accordance with article 248, numeral 32, of the TUO DE LA LPAG3 and article 2574 of the aforementioned body

[2] Article 230, numeral 3 of Law No. 27444 (hereinafter, LPAG).

[3] “Article 248.- Principles of the administrative sanctioning power The sanctioning power of all entities is additionally governed by the following special principles: (…) 3. Reasonableness.- The authorities must foresee that the commission of the sanctionable conduct does not prove more advantageous for the offender than complying with the infringed norms or assuming the sanction. However, the sanctions to be applied must be proportional to the non-compliance classified as an infraction, observing the following criteria that are indicated for the purposes of their graduation: a) The illicit benefit resulting from the commission of the infraction; b) The probability of detection of the infraction; c) The seriousness of the damage to the public interest and/or protected legal right; d) The economic harm caused; e) Recidivism, for the commission of the same infraction within the term of one (1) year from when the resolution that sanctioned the first infraction became final. f) The circumstances of the commission of the infraction; and g) The existence or not of intentionality in the conduct of the offender”.

[4] “Article 257.- Exemptions and mitigating circumstances of liability for infractions 1.- The following constitute conditions exempting from liability for infractions: a) Duly proven fortuitous event or force majeure. b) Acting in compliance with a legal duty or the legitimate exercise of the right of defense. c) Mental incapacity duly proven by the competent authority, provided that it affects the aptitude to understand the infraction. d) The binding order of a competent authority, issued in the exercise of its functions. e) The error induced by the Administration or by a confusing or illegal administrative provision.

normative5 ; the administrative sanctions that are imposed must take into account the criteria set forth by the LMV, the SANCTIONS REGULATION and the TUO OF THE LPAG, as well as the mitigating and exempting circumstances of liability regulated in articles 26 and 27 of the SANCTIONS REGULATION, in accordance with the provisions of article 257 of the TUO OF THE LPAG;

48. Within that framework, the evaluation of the sanction must consider: a) Prior record of the offender; b) The seriousness of the damage to the public interest and/or protected legal interest; c) The harm caused and its impact on the market; d) Recidivism6 ; e) The circumstances of the commission of the infraction; f) The illicit benefit resulting from the commission of the infraction; g) The existence or not of intent in the conduct of the offender; and h) The probability of detection of the infraction;

49. In that sense, in order to reconcile the criteria of the TUO OF THE LPAG with those indicated in Decreto Ley N° 21907 and in the SANCTIONS REGULATION, and so that these criteria are adequately considered so that their assessment observes the principle of reasonableness and the sanction to be imposed is adjusted to them, the following criteria are analyzed;

50. With regard to the prior sanction record, it must be noted that in accordance with the provisions of article 25 of the SANCTIONS REGULATION, the prior records are the final sanctions imposed by the SMV within the period of four (4) years prior to the commission of the infraction to be sanctioned with respect to any type of infraction;

51. In that sense, from the review carried out in said period, in relation to the charges under evaluation, it has been verified that SCOTIA SAFM has the following prior records:

No.	Resolution	Resolved	Finality
i	Deputy Superintendent of SMV Resolution No. 028-2016-SMV/107	SCOTIA FONDOS is sanctioned with a fine of 6.375 UIT equivalent to S/ 23 587.50 (Twenty-three thousand five hundred eighty-seven and 50/100 Soles) for having incurred four (04) infractions of a minor nature classified in Annex I, numeral 3, subparagraph 3.1 of the Sanctions Regulation for having communicated periodic and occasional information outside the period established by the applicable regulations.	04/08/2016

[f] The voluntary correction by the possible sanctioned party of the act or omission imputed as constituting an administrative infraction, prior to the notification of the imputation of charges referred to in subparagraph 3) of article 253.

[2.-] The following constitute conditions mitigating liability for infractions: a) If, once an administrative sanctioning procedure has been initiated, the offender acknowledges its responsibility expressly and in writing. In cases where the applicable sanction is a fine, it is reduced to an amount not less than half of its amount. b) Others established by special rule”.

[5] Article 2 of Decreto Legislativo N° 1272 modified article 236-A of the LPAG, and in that sense incorporates and restructures the exempting and mitigating circumstances of liability.

[6] The sanction criteria referring to Recidivism and the Probability of detection of the infraction were introduced by article 2 of Decreto Legislativo N° 1272 which modified, among others, article 230; numeral 3 of the LPAG.

[7] Notified on 11 July 2016.

No.	Resolution	Resolved	Finality
ii	Deputy Superintendent of SMV Resolution No. 063-2016-SMV/108	SCOTIA FONDOS is sanctioned with a fine of 7.60 UIT equivalent to S/ 28 880,00 (Twenty-eight thousand eight hundred eighty and 00/100 Soles) for having incurred five (5) infractions of a minor nature classified in Annex I, numeral 3, subparagraph 3.1 of the Sanctions Regulation for having submitted occasional information outside the period established by the applicable regulations referring to material facts of resolutions adopted at the Shareholders' Meeting, and excesses of investment and participation.	23/01/2017
iii	Deputy Superintendent of SMV Resolution No. 080-2017-SMV/109	SCOTIA FONDOS is sanctioned with a fine of three (03) UIT, equivalent to S/. 11 400,00 (Eleven thousand four hundred and 00/100 Soles) for having incurred one (01) infraction of a very serious nature classified in Annex VII, subparagraph 1, numeral 1.15, of the Sanctions Regulation, because the Internal Control Officer did not perform its functions in the manner provided in the Mutual Funds Regulation, by not reporting to the body on which it depends the results of its supervision work and by not performing its functions with exclusive dedication.	25/09/2017
iv	Deputy Superintendent of SMV Resolution No. 022-2018-SMV/1010	SCOTIA FONDOS is sanctioned with two (02) warnings, for having incurred one (01) infraction of a serious nature classified in Annex I, numeral 2, subparagraph 2.11 of the Sanctions Regulation; and one (01) infraction of a serious nature classified in Annex VII, numeral 2, subparagraph 2.13 of the Sanctions Regulation, for not timely submitting the communication of the details of the fund merger process, and for not timely submitting the account statements, respectively.	06/06/2018
v	Deputy Superintendent of SMV Resolution No. 028-2018-SMV/1011	SCOTIA FONDOS is sanctioned with three (3) warnings and with a fine of 4.944 UIT, equivalent to S/. 20 038,65 (twenty thousand thirty-eight and 65/100 Soles) for having incurred in eight (8) infractions of a minor nature typified in Annex I, numeral 3, subsection 3.1 of the Sanctions Regulation, by not having complied with presenting eventual information within the term established by the applicable regulations referred to facts of importance.	11/06/2018

52. With regard to recidivism for the commission of the same infraction, the firm sanction imposed by the SMV within the term of one (1) year prior to the commission of the infraction to be sanctioned is taken into account. Within this framework, it must be stated that SCOTIA SAFM does not present sanctions within the aforementioned term, for the commission of the same infractions subject of analysis in

[8] Notified on 30 December 2016.

[9] Notified on 1 September 2017.

[10] Notified on 15 May 2018.

[11] Notified on 18 May 2018.

the present administrative sanctioning procedure, therefore this criterion is not configured;

53. As for the circumstances of the commission of the infraction, it must be mentioned that SCOTIA SAFM, in its capacity as a company supervised by the SMV, knows the rules that regulate the securities market and, in that sense, the rules that regulate its activity as a mutual fund management company. However, SCOTIA SAFM incurred in the infraction subject of evaluation in the present procedure;

54. In this regard, SCOTIA SAFM indicated that the infraction was generated by an operational error when registering, in its systems, the issuer of the securities acquired in the operation of 09 January 2020, recording as issuer "Bancolombia" instead of "Bancolombia Panamá". Said error caused that the subsequent purchase operation of the deposit certificates of the FUND of 13 May 2020, observed through the OFFICIAL LETTER OF CHARGES, could not be detected or alerted in time by its risk and investments area. The non-permitted investments were warned by the SMV through Official Letter No. 3165-2020-SMV/10.2, with which the management company was requested to immediately rectify them. In response to the cited official letter, SCOTIA SAFM informed that, on 16 September 2020, the sale of the deposit certificates issued by Bancolombia Panamá was carried out, thus regularizing the non-permitted investments that the FUND maintained with 125 days of delay with respect to the deadline;

55. It should be noted that said error cannot be acceptable for an entity with several years operating in the securities and mutual funds market, which, as has been demonstrated in the present case, had to be warned by the SMV through the cited official letter so that it proceeds with the rectification. Likewise, it must be indicated that SCOTIA SAFM states that the error was due to not having included in its systems the word "Panamá" in the issuer name; however, it must be indicated that the administrator's systems are sources for compliance with its obligation to submit periodic information to the SMV observing what is required by its technical specifications. Thus, in said information referred to the FUND, effectively, in the "Issuer" field for 13 May 2020 for certain deposits "Bancolombia Panamá" is recorded, and for the deposit certificates subject of charges "Bancolombia"; however, it must be specified that the structured information that is submitted includes additionally, among others, the country linked to the security to be reported; therefore, for both cases, Scotia SAFM registered and reported "Panamá" as the country; from which it follows that in SCOTIA SAFM's systems, there was information about the origin of the instruments subject of charges; therefore, limiting that the infraction was based only on the review of the issuer's name, besides implying lack of diligence, as noted, is not acceptable;

56. Regarding the error incurred, SCOTIA SAFM specifies that, so far in the period of detection of the infraction, carried out through Official Letter No. 3165-2020 until the date of its defenses, it has carried out the review of processes and the updating of manuals in relation to the activities of the investment team, as well as the training of personnel regarding the regulatory treatment applicable to the investment limits of the mutual funds it manages;

57. Additionally, it adds that it will implement within the second quarter of 2024 additional verification measures within its investment area that will allow identifying the creation data of the issuer and instruments prior to negotiation, which will be compared with the system's database, public sources, and documentation provided by the issuers themselves;

58. It should be added that, according to what was informed by the management company through letter of 23 September 2020, the purchase of the 4,000 deposit certificates issued by Bancolombia Panamá was made on 13 May 2020 at the price of 101.8675; while the sale was made on 16 September 2020 at the price of 106.6718; that is, at a higher price than the purchase price. Likewise, it must be indicated that as of 13 May 2020, the non-permitted investments represented 0.71% of the FUND's equity; and on 16 September 2020, 0.56%;

59. On the other hand, it must be indicated that the differential observed between the purchase price (101.8675) and the sale price (106.6718), was made in a context in which the valuation rates of the deposit certificates subject of charges presented a decreasing trend, therefore given the nature of said types of instruments, the decrease of said rates is directly reflected in an increase of their prices. In this sense, if the context had been that of an increase in rates, the sale prices instead of presenting increases with respect to the purchase prices, would have implied a loss for the FUND. For greater detail, the evolution of the valuation rates of the non-permitted investment subject to charges is presented below, from 13 May 2020 to 16 September 202012;

60. Regarding the economic harm caused and the impact on the market, in the present case, it has not been evidenced that the infringement incurred by SCOTIA SAFM has produced a specific quantifiable harm in the market, that is, it has not been determined that one or more investors have been specifically affected or caused economic damage, and therefore it has also not been evidenced that there has been an impact on the market;

61. Notwithstanding this, it must be noted that the purchase transaction of 13 May 2020 was carried out for an amount of US$ 4 245 311.11; an amount that, instead of being invested in permitted instruments, was

[12] Source: Proveedor Integral de Precios S.A. (PIP).

invested in non-permitted instruments, exposing the FUND, in addition to the interest rate risk previously indicated, to investments related to non-cooperative countries and territories for tax purposes; which in turn implied an opportunity cost of the returns that could have been obtained in permitted investments;

62. Regarding the illicit benefit resulting from the commission of the infringement, it must be noted that it has not been proven that SCOTIA SAFM has obtained a benefit that is directly related to the infringements subject to analysis in the present administrative proceeding;

63. As for the severity of the harm to the public interest and/or protected legal interest, it has not been possible to prove that the conduct of SCOTIA SAFM in the commission of the infringement in the present sanctioning proceeding has caused harm to the public interest. However, the legal interests related to the protection of the mutual fund industry and the duties of the management company to manage its activity prudently, caring for the interests of the participants as if they were its own, have been affected;

64. Indeed, the regulations regarding non-permitted investments that management companies must observe in the management of mutual funds seek to prevent investments in financial instruments that do not comply with the prudential criteria established in the regulations and that could harm the participants and the mutual fund industry. In this sense, the failure by a mutual fund management company to observe the criteria for permitted investments established by the regulations does not contribute to achieving the aforementioned objective;

65. Regarding the existence or not of intent in the conduct of the infringer, it has not been evidenced that SCOTIA SAFM acted with intent in the commission of the infringements subject to charges;

66. With regard to the probability of detection of the infringement, it must be noted that in the present case the infringement incurred by SCOTIA SAFM was evidenced as a result of the supervision and control activities carried out by the SMV on the information submitted by the management company daily to the SMV regarding the investments made by the mutual funds it manages. Therefore, the probability of detection of the infringement was high;

67. In addition to the foregoing, it is appropriate to analyze the exculpatory and mitigating circumstances of liability established in article 257° of the TUO DE LA LPAG as well as the mitigating and exculpatory conditions of liability established in articles 26° and 27°13 of the REGLAMENTO DE

[13] “Article 27.- EXEMPTIONS FROM LIABILITY FOR INFRINGEMENTS” The following constitute conditions exempting from liability for infringements: a) Fortuitous event, force majeure or another exceptional situation that, in the opinion of the SMV, is comparable to a duly proven fortuitous event or force majeure. b) Acting in compliance with a legal duty or the legitimate exercise of a right of defense. c) Mental incapacity duly proven by the competent authority, provided that it affects the ability to understand the infringement. d) The mandatory order of a competent authority, issued in the exercise of its functions. e) The error induced by the Administration or by a confusing or illegal administrative provision. f) The voluntary correction by the possible sanctioned party of the act or omission imputed as constituting an administrative infringement, prior to the notification of the imputation of charges referred to in subsection 3) of article 253 of the LPAG and provided that no communication demanding compliance with the obligation has been sent”

SANCTIONS. In this regard, it is not observed that in the present case any of the assumptions that constitute conditions exempting from liability have been configured;

68. With regard to the voluntary declaration of the commission of the infringements and the contribution of the infringer to their clarification, established in article 26°14, literals a) and b) of the REGLAMENTO DE SANCIONES, in accordance with the provisions of article 257°, numeral 2, subsection a) of the TUO DE LA LPAG, it must be noted that SCOTIA SAFM has acknowledged its responsibility for the infringement incurred expressly and in writing, within the period granted for the presentation of defenses, and in a precise, concise, clear and unconditional manner, without ambiguous or contradictory expressions, as well as has contributed to its clarification;

69. Likewise, the provisions of article 26°, literal c) of the REGLAMENTO DE SANCIONES are applicable, since the unforeseen and non-permitted investment of the FUND was corrected after the SMV's requirement;

70. From the foregoing, it is concluded that SCOTIA SAFM has incurred in the commission of one (1) infraction classified as serious in Annex VII, numeral 2, subsection 2.8 of the SANCTIONS REGULATION, and therefore it would be appropriate to impose on said management company a sanction in accordance with the provisions of article 34° of the SANCTIONS REGULATION, which establishes that serious infractions are sanctioned with a fine of no less than twenty-five (25) and up to fifty (50) UIT or with the suspension of the operating authorization for up to (20) days; however, to the extent that SCOTIA SAFM acknowledged the commission of the infraction, and has not hindered the clarification thereof; it is appropriate to apply the provisions of article 26°15, literals a), b) and c) of the SANCTIONS REGULATION, so the fine

[14] “Article 26.- MITIGATING CONDITIONS OF LIABILITY FOR INFRACTIONS The following constitute mitigating conditions of liability for infractions: a) Acknowledgment of liability by the offender expressly and in writing, once the administrative sanctioning procedure has begun. When the applicable sanction is a fine, it is reduced, taking into account the following: 1. If the acknowledgment of the infraction is presented within the term granted for the submission of defenses, the reduction amount shall be fifty percent (50%). 2. If the acknowledgment is presented after the expiration of the term granted for the submission of defenses and before the expiration of the term granted to formulate allegations to the instruction report, the reduction amount shall be thirty percent (30%). 3. If the acknowledgment is presented after the expiration of the term granted to formulate allegations to the instruction report and up to before the issuance of the sanction resolution, the reduction amount shall be ten percent (10%). The acknowledgment of liability regarding an infraction must be made precisely, concisely, clearly, expressly and unconditionally, and must not contain ambiguous or contradictory expressions; otherwise, it shall not be understood as an acknowledgment. If defenses are presented, despite having made an acknowledgment of liability, it shall be understood as a non-acknowledgment, and the authority shall proceed to evaluate the defenses. b) Contribution of the offender to the clarification of the infraction. c) The correction made after its requirement or at the beginning of the administrative sanctioning procedure”.

[15] “Article 26.- MITIGATING CONDITIONS OF LIABILITY The following constitute mitigating conditions of liability for infractions: a) Acknowledgment of liability by the offender expressly and in writing, once the administrative sanctioning procedure has begun. When the applicable sanction is a fine, it is reduced, taking into account the following: (…) 2. If the acknowledgment is presented after the expiration of the term granted for the submission of defenses and before the expiration of the term granted to formulate allegations to the instruction report, the reduction amount shall be thirty percent (30%). (…) The acknowledgment of liability regarding an infraction must be made precisely, concisely, clearly, expressly and unconditionally, and must not contain ambiguous or contradictory expressions; otherwise, it shall not be understood

for said infraction must range between 12.5 UIT and 25 UIT; that is, 50% of the range established for serious infractions;

71. Nevertheless, taking into account the sanction criteria evaluated, and in application of the Principle of Reasonableness contemplated in article 248°, numeral 3 of the TUO DE LA LPAG which states that the sanctions to be applied must be proportional to the non-compliance classified as an infraction, therefore the circumstances of the commission of the infraction must be considered, that it has not been possible to prove that the analyzed infraction has produced any harm to the participants nor impact on the market, that the probability of detection of the infraction was high, that the management company is not a repeat offender in the infraction and that SCOTIA SAFM has collaborated in the clarification of the facts and has corrected the non-permitted investments;

72. In that sense, considering the analysis carried out, it is proposed to impose on SCOTIA SAFM a fine sanction, applicable to minor infractions, in accordance with the provisions of article 35° of the SANCTIONS REGULATION;

In accordance with the provisions of articles 32°, numeral 16, of the Regulation of Organization and Functions of the SMV, approved by Supreme Decree No. 216-2011-EF and its amendments.

RESOLVES:

Article 1°.- Declare that Scotia Fondos Sociedad Administradora de Fondos Mutuos S.A. has incurred in one (1) infraction classified as serious as established in Annex VII, numeral 2, subsection 2.8 of the Sanctions Regulation, approved by SMV Resolution No. 035-2018-SMV/01, for having made non-permitted investments on behalf of the fund under its management.

Article 2°.- Sanction Scotia Fondos Sociedad Administradora de Fondos Mutuos S.A. with a fine amounting to three (3) UIT, equivalent to S/ 12 900.00 (Twelve thousand nine hundred and 00/100 Soles) for the commission of the infraction indicated in the previous article.

Article 3°.- This resolution does not exhaust the administrative remedy, unless it is consented to, and may be challenged before the Deputy Superintendency of Prudential Supervision by filing a reconsideration or appeal before the same, within a period of fifteen (15) business days counted from the day following its notification.

Article 4.- In the event that this resolution is not challenged by means of a reconsideration or appeal within fifteen (15) business days of its notification and becomes final, it must be published on the SMV Institutional Page on the Single Digital Platform of the Peruvian State (www.gob.pe/smv), in compliance with the provisions of numeral 1, article 7 of the Policy on the dissemination of regulatory projects, general legal norms, early agenda and other administrative acts of the SMV, approved by SMV Resolution No. 014-2014-SMV/01 and its amendment, and by the provisions of article 14 of the Sanctions Regulation, approved by SMV Resolution No. 035-2018-SMV/01.

[a] as an acknowledgment. If defenses are submitted, despite having made an acknowledgment of responsibility, it shall be understood as a non-acknowledgment, and the authority shall proceed to evaluate the defenses."

[b] Contribution of the offender to the clarification of the infraction.

[…] (…).

Article 5.- Transcribe this resolution to Scotia Fondos Sociedad Administradora de Fondos Mutuos S.A.

Register, communicate and publish.

Signed by: GUTIERREZ OCHOA Omar Darl Reason:

Omar Gutiérrez Ochoa
Deputy Superintendent
Deputy Superintendency of Prudential Supervision