New Requirements and Responsibilities of Market Participants

Mar 6, 2022 | Noticias-en | 0 comments

After 5 years of processing, on April 13 of this year, Law No. 21,314 was published in the Official Gazette, which establishes new transparency requirements and reinforces the responsibilities of market agents, regulates pension counseling and other matters.

The Law amends the following legal bodies:

Law No. 18,045 on Securities Market.
Law No. 18,046 on Corporations.
Decree Law No. 3,500 of the Ministry of Labor and Social Security of 1980, which establishes a new pension system.
Decree with Force of Law No. 251, of the Ministry of Finance, on Insurance Companies, Corporations and Stock Exchanges.
Law No. 19,913, which creates the Financial Analysis Unit and modifies various provisions on money laundering and money laundering.
Decree Law No. 3,538 of 1980, which creates the Financial Market Commission.
Commercial Code.
Law No. 18,010, which establishes rules for credit operations and other money obligations.
One of the amendments that generated controversy is the one that established that individuals and companies that make massive recommendations for pension investments, such as changes in AFP funds, must be subject to joint regulation by the Superintendence of Pensions and the CMF, which caused unregulated companies such as Felices y Forrados to announce that they will cease to provide services.

The Law also subjects the provision of financial investment advisory services to the supervision of the CMF, incorporating, among other requirements, that those who habitually provide such services must first register with the CMF.

One of the most relevant amendments in these two areas is the increase in penalties for offenses and the broadening of the agents that may be punished.

The Law also introduces amendments relating to insurance associated with money lending obligations, a digital insurance consultation system administered by the CMF, and default interest on credit operations.

Other amendments to the Law in the area of criminal sanctions are as follows:

Price manipulation: Article 52 of the current Law No. 18,045 is amended, establishing that any type of action, and not only transactions, aimed at stabilizing, fixing or artificially varying the prices of publicly offered securities will be a crime.
External auditing companies: The current article 59, letter d) is amended, stating that the partners of external auditing companies that maliciously issue an opinion or provide false information about the company subject to review, or that alter, hide or destroy information of an audited entity, thus distorting its real financial situation, will be sanctioned.
Regarding directors and senior executives of a company, stock exchange or securities intermediary, letter h) is added to the current article 59 establishing that the delivery of maliciously false information or statements to the board of directors, management, external auditors or risk classifiers is punishable.
Penalties are increased for those who disseminate false or biased information in the securities market and for companies and individuals who do not provide correct information to the CMF.
A new figure, called anonymous whistleblower, is also created to encourage and protect whistleblowing in relation to violations of the CMF’s competition laws. In the event that the complaint results in fines, the whistleblower will receive a percentage of the fine. In this figure, the whistleblower must not be involved in the facts neither as a participant nor as a victim.

Finally, the Law also modifies rules on disclosure of essential information and prohibition of transactions on securities by persons related to the respective issuer in certain circumstances, and in matters of corporations, rules on operations with related parties, independent directors and policies for the election of directors in subsidiaries of parent companies supervised by the CMF.

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