The Brazil Securities Commission (CVM) Board rejected a proposed settlement (Termo de Compromisso) with XP Investimentos CCTVM S.A., Invest Smart Assessor de Investimento Ltda. and several of their directors and partners in an administrative proceeding, while approving a BRL 1,881,000 settlement with KPMG Auditores Independentes Ltda. and the responsible technical partner, Anderson Luiz de Menezes, in a sanctions case. In the XP/Invest Smart matter, the Term of Commitment Committee concluded the settlement was not convenient or timely, citing the alleged seriousness of the conduct, two prior withdrawals of settlement proposals by the applicants, limited procedural economy given that the administrative inquiry was close to completion, and proposed amounts still viewed as distant from what would be adequate and proportionate. The allegations under review include misleading public presentation of an autonomous investment agent (AAI) office’s activities and branding, simulated AAI activity by an individual without authorisation, use of advertising without prior approval by XP, potential provision of securities advisory and/or portfolio management-type services, operation of a “hidden” managing partner without ANCORD registration, and shortcomings by XP and responsible directors in due diligence and ongoing supervision of the AAI office, including around “Bank Rio” branding and related commercial links. For KPMG and Menezes, the CVM accepted a revised proposal after the parties agreed to the committee’s counterproposal, requiring payments of BRL 1,782,000 (KPMG) and BRL 99,000 (Menezes). The case concerns alleged non-compliance with Brazilian independent audit standards (NBC TA 230 and NBC TA 540) in the audit of Luggo Fundo de Investimento Imobiliário for the financial year ended 30 June 2020.

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