The Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) issued CVM Instruction No. 538, dated October 23, 2013 (CVM Instr. 538/2013), which amends CVM Instruction No. 483, of July 6, 2010 (CVM Instr. 483/2010), that regulates the activity of the securities analysts (analistas de valores mobiliários) in Brazil.

According to CVM Instr. 483/2010, securities analyst is the individual who professionally prepares analysis reports for publication, disclosure or distribution to others, even though restricted to clients.1 The term "analysis report" means any text, monitoring reports, studies or analysis on specific securities or issuers of certain securities or influence that might assist investors in making investment decision. Public exhibitions, presentations, meetings, conference calls and other non-written events, whose content is typical of the analysis report, are also included in the same definition.

The main goal of CVM Instr. 538/2013 is to avoid conflict of interest, banning the securities analyst participation in any activities related to public offers for distribution of securities and mergers and acquisitions (m&a) transactions.

Originally, it was forbidden for the securities analyst: (i) to issue analysis reports in order to obtain for himself/herself or for others, improper advantage, (ii) to omit information on conflict of interest, (iii) to negotiate directly or indirectly, in his/her own name or in the name of others, securities object of analysis reports or derivatives backed by such securities for a period 30 days before and five days after the disclosure of the analysis report on such security or its issuer, and (iv) to deal directly or indirectly on behalf of himself/herself or others, securities object of analysis reports or derivatives backed by these securities which conflict with the recommendations or conclusions expressed in the reports of analysis prepared: (a) up to six months from the disclosure of such report, or (b) until the release of a new report on the same issuer or security.2

Now three more restrictions have been included in this list of prohibition, as new items (v), (vi) and (vii), by means of CVM Instr. 538/2013. Therefore, from now on, the securities analyst cannot:

  1. participate directly or indirectly in any activity related to public offers for distribution of securities, including: (a) efforts to sell products or services within the framework of the securities market; and (b) efforts to raise new customers or jobs. This prohibition shall not apply, however, to the analyst's activities which have as their objective the education of investors, provided that the following conditions are duly complied with: (i) the analyst uses analysis reports without indication of recommendation; (ii) the analyst does not communicate with investors in the presence of any person connected to the distribution areas of products or services or to the issuer of securities; and (iii) the legal entity to which the analyst is bound must have written records of the investors who participated in the activity of investor education.
  1. participate directly or indirectly in any activity linked to financial consulting in m&a transaction.
  1. disclose the analysis report or its contents, even if partially, for someone who is not part of the team, especially the issuer object of the analysis or whose securities are object of analysis, before its publication, disclosure or distribution by means of proper channels. This prohibition shall not apply to: (i) in cases where the factual parts of the report have been disclosed to third parties for the purpose of verifying the accuracy of the information contained therein; and (ii) the review by legal advisors and the area of internal controls (compliance).

These new restrictions are contained in article 4 of CVM Instr. 483/2010, as amended by article 1 of CVM Instr. 538/2013.


1 The securities analyst must be an individual but a securities analyst company is also deemed to be a securities analyst.

2 The restrictions mentioned in items (iii) and (iv) herein do not apply to trading with shares of investment funds, unless: (a) the analyst can influence directly or indirectly the administration or management of the fund, or (b) the investment fund concentrates its investments in industries or businesses covered by the reports produced by the analyst.

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