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CVM demands clear language in offers for investment of funds abroad

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The Securities and Exchange Commission (CVM) published on Thursday (27) a circular letter addressed to investment fund managers and distributors. In it, the autarchy demands a clear language in the offers of investments of Brazilian funds abroad.

According to the document, the objective is to make investment fund communications to the investing public – both in Brazil and abroad – clearer and better informed. In other words, "it is essential that communication with the investor avoids misleading him".

The alert is from Daniel Maeda, Superintendent of Institutional Investor Relations (SIN). The CVM department is responsible for complying with rules related to registration and the disclosure of information about a product or financial management.

According to Maeda, the letter proposes to standardize the treatment of some of these advertising materials, reducing the possibility of communication noise.

"The advertising of investment funds governed by CVM Instruction 555 should allow the investor to analyze the objectives, purposes, strategies and characteristics of the fund in an objective and clear manner, in order to make decisions in a more secure manner," said the superintendent.

CVM alerts main points

According to the circular letter, the CVM clarifies that the language used in investment fund advertising materials should make the following points clear:

  • That the eventual participation of investors in the offer will take place through an investment fund, so that its shareholders are not shareholders of the company.
  • That the fund's performance may not correspond to the expected performance because profitability may be affected by fees
  • And that there is no guarantee that the fund will effectively participate in the public offering, due to the different set of rules that may govern public offers depending on the jurisdiction involved.

The document ends by pointing out that any disclosure material used by investment funds with these characteristics cannot induce investors to believe that they directly participate in the public offering process for shares or other financial assets of the issuing company.

According to the text, it is also worth alerting these investors that they will not be entitled to the same performances, rights and prerogatives of the company's shareholders.


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