Brazil Securities Commission Governance and Risk Management Committee publishes Banco Master and REAG working group diagnosis based on 314 cases

The Brazil Securities Commission (CVM) published a communiqué summarising the diagnosis and recommendations produced by its Working Group on Banco Master, REAG and connected entities, and the Governance and Risk Management Committee’s deliberations on those recommendations. The review was triggered by the events leading to the liquidation of Banco Master and REAG and aimed to strengthen how risks are integrated and prioritised within CVM’s capital markets supervision perimeter. The working group, established for a three-week mandate, analysed 314 proceedings opened since 2017 in CVM’s Electronic Information System using a combination of artificial intelligence tools and qualitative analysis. The most recurrent issues were failures in disclosure or mandatory reporting and weaknesses in compliance and internal controls, alongside repeated breaches involving fiduciary duties, conflict-of-interest handling and other investment fund rules; the dataset also included indications of insider trading, fraud against investors and market manipulation, which were described as less frequent but particularly serious. Supervisory activity intensified from 2025, when 131 of the 314 proceedings were opened, and 165 cases originated from external sources including complaints and communications from B3/BSM, the Central Bank of Brazil and other authorities.