Brazilian companies that have headquarters or publicly traded capital in the United States are subject to dual regulation, both by the Securities and Exchange Commission (SEC) in Brazil and by the regulatory bodies in the United States, how, for example, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). According to the Empresa Institute, entity for the defense of minority investors, this regulatory overlap, although it represents compliance challenges, provides additional protection to Brazilian investors
The recent case of Avenue Securities illustrates this reality. The brokerage was fined US$ 300,000 (approximately R$ 1,77 million) by FINRA due to misleading advertising practices aimed at Brazilian investors. Between 2020 and 2023, paid influencers by Avenue promoted investments without clarifying the real risks involved. Some content promoted financial products with unrealistic promises of guaranteed returns, while others suggested that certain assets were cost-free, omitting information about additional fees. The investigation also revealed failures in the brokerage's oversight of the communication made by these influencers, violating market transparency regulations
"The action of foreign regulatory bodies in cases that affect Brazilian investors represents an extra layer of protection". While in Brazil the oversight may be limited, in the United States, are subject to strict compliance standards, remember Eduardo Silva, president of the Business Institute
He notes that the system ofclass actionNorth American also stands out as a more efficient mechanism for investors seeking compensation for potential damages. Different from individual judicial processes or arbitrations in Brazil, that can be long and burdensome, the class action allows multiple investors to be represented in a single lawsuit, increasing the chances of reimbursement and ensuring greater bargaining power against the infringing companies
Against the flow, Silva warns of the risk of Bill n. 2925, of 2023, which is listed as one of the priority agendas of the Ministry of Finance for the current year. "With your approval, "it would be much safer for the investor to buy securities abroad and not in Brazil". Under the guise of "defending minorities," the project makes it difficult, in practice, with the exercise of demands and exempts companies from responsibilities after issuance on paper. "If it were in effect", IRB and Americanas, for example, would be armored
Besides Avenue Securities, other cases demonstrate the importance of applying U.S. regulation for Brazilian companies. In 2018, the SEC fined Petrobras $853 million for bribery and corruption, ensuring compensation to foreign investors affected by the Lava Jato scandal. "Paradoxically, a Brazilian who acquired paper in the USA, was compensated, by agreement. "Those who bought at B3 endure the resistance and high combative nature of Petrobras in ongoing arbitrations", Silva states
More recently, a StoneCo, Brazilian fintech listed on Nasdaq, was the subject of investigations due to failures in disclosing operational risks, reinforcing the importance of transparency required by US regulations
Several Brazilian companies have already faced class actions in the USA. Among them, is Braskem, that underwent a class action lawsuit in the US for allegations of misleading information about its internal controls and accounting practices. Vale was also the target of a class action after the Brumadinho dam collapse, in 2019, resulting in lawsuits filed by investors who claimed losses due to the company's lack of transparency regarding environmental and operational risks. Another was Eletrobras in light of allegations of corrupt practices and inadequate disclosure of financial information. Investors who acquired the company's ADRs sought compensation for losses attributed to these practices. Gerdau and Bradesco were also accused in American courts of involvement in corrupt practices and inadequate disclosure of information
The dual regulation imposed on Brazilian companies with a presence in the United States not only reinforces the commitment to transparency and good practices, but also benefits Brazilian investors who, many times, face difficulties in obtaining compensation for damages in the national legal scenario. With a more stringent regulatory environment and a more agile judicial system, the Brazilian investor can count on more guarantees and greater security in their investments, observe
