Another Forex company was banned from operating in the Brazilian market by the Brazilian Securities and Exchange Commission (CVM). After the IQ Option, now it was the turn of the Start Invest Group, which received a Stop Order on attracting clients in Brazil for businesses involving Forex under penalty of a daily fine of one thousand reais. The decision was published on Thursday (30) in the Federal Official Gazette.
According to Declaratory Act 17.825 / 20, the group cannot attract clients to carry out operations in the so-called Forex market (Foreign Exchange) in Brazil. Start Invest had been making this irregular fundraising through the website “https://grupo-start-invest.negocio.site“.
As well as the recent prohibition of the IQ Option, the municipality clarified that Forex transactions conform “to the definition of a derivative contract and, therefore, to the legal concept of security, as provided for in item VIII of art. 2 of Law No. 6,385, of December 7, 1976 ”.
The CVM explained that Forex consists of “negotiations with foreign currency pairs, revealing the existence of financial instruments through which exchange rates are traded”.
Forex banned by the CVM
The Start Invest Group's ban was due to the fact that it “does not integrate the distribution system provided for in art. 15 of Law 6,385 / 76 ”, as stated in the CVM's Stop Order issue.
According to this provision, only financial institutions and other companies whose purpose is to distribute or issue securities are part of this system. Whoever controls this, therefore, is the autarchy itself.
The regulator, then, imposed a penalty of a daily fine of one thousand reais, if the company did not immediately suspend the publication of any public offer of investment opportunities in the so-called Forex market.
For the CVM, it matters little whether the Forex offer has been made directly or indirectly. If the decision is not obeyed, the company will suffer from the fine, which did not have a stipulated ceiling, and may thus reach high values.
Punishment beyond the fine
The fine, however, may be only part of the punishment. CVM also mentioned the company's risk of suffering other penalties provided for in Law 6,385 / 76.
“Furthermore, without prejudice to the responsibilities for the infractions already committed before the publication of this Act, there may be the imposition of the applicable penalties, under the terms of art. 11 of Law 6,385 / 76, after the regular administrative sanctioning process. ”
According to that provision, the company may end up banned for up to 20 years from practicing certain activities or operations that depend on authorization or registration with the CVM. This, however, will depend on the end of a probable Sanctioning Administrative Process against the Start Invest group.
CVM and the alert to investors
It is not the first time that the CVM warns about Forex operations. The municipality even launched a publication in the Alerts Series explaining to investors that the Foreign Exchange (Forex) market is a type of derivative contract that involves trading with foreign currency pairs.
"These operations conform to the definition of a derivative contract and, consequently, to the legal concept of security".
The derivative contract, regardless of the assets involved, is a type of security, as stated in item VIII, of art. 2 of Law 6,385 / 76. Under the Law, Forex can only be traded under the CVM sieve.
The agency in November 2018 even alerted investors to the risk of exposing personal data in companies offering investment in Forex. According to the municipality, the risk goes beyond the possible loss of amounts contributed in this type of business.
"Investors who decide to invest in this market are exposed not only to the risks related to the investment strategy, but also to the insecurity resulting from providing personal data to entities of uncertain suitability", mentioned the agency.
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This source of this article is portaldobitcoin.com.