| SAO PAULO, March 7
SAO PAULO, March 7 Brazilian federal prosecutors
and members of the securities industry watchdog are
investigating investment consulting firm Empiricus Research for
failing to warn clients about the risk of certain strategies,
newspaper Valor Econômico reported on Tuesday.
According to Valor, which obtained access to a 175-page
administrative probe by the watchdog known as CVM, the
investigation began in November 2014, and new evidence was added
as recently as last month.
Federal prosecutors have also started a criminal probe of
São Paulo-based Empiricus, which focuses on retail clients, but
has not filed any charges, Valor said.
In a statement, Empiricus said it was convinced it had not
broken the law. "The company trusts authorities, with whom it
has always cooperated, and is sure all questions will be duly
answered," the statement said.
A spokeswoman for the Prosecutor General's office declined
to comment, saying ongoing investigations are subject to legal
secrecy. A CVM spokeswoman did not immediately answer calls.
Empiricus makes recommendations to investors through a
series of market reports and videos as part of a subscription
service. A new flurry of client complaints led the CVM to
intensify a probe on the company even after it agreed to pay
fines to a group representing market analysts in Brazil for
failing to alert investors to the risks of suggested strategies,
The company promised one of those strategies would
"transform 1,000 reais ($321) into more than 150,000 reais in 32
days." Another invited clients to find out how to earn a 41
percent return in 40 days, the newspaper said.
Aggressive marketing of investment strategies, a source of
risks for smaller, less knowledgeable investors, is difficult to
penalize in Brazil. According to Valor, CVM has admitted that
legal roadblocks could make it harder to punish Empiricus if
The company, which was founded in 2009, has been the target
of recent news articles questioning its model.
Financial blog Brazil Journal reported earlier this year
that Empiricus was generating an annual 200 million reais in
revenue from more than 150,000 subscribers to its service. More
than 1 million people get its daily newsletter, the blog added.
($1 = 3.1188 reais)
(Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn)