Our partner Roberto Panucci was featured in an ESTADÃO article that reignited the debate on one of the most sensitive and legally misunderstood concepts in financial and insurance regulatory law: unblemished reputation (reputação ilibada).
To bring more clarity to this subject, our partners Roberto Panucci and Daphne Minerbo note the following:
In authorization processes conducted by the Central Bank of Brazil and SUSEP - Superintendência de Seguros Privados, the requirement of an unblemished reputation is not the same as the absence of investigations, lawsuits or asset-related challenges. By regulatory design, it is an open, evaluative and forward-looking legal criterion, not an automatic filter based on the mere existence (or absence) of proceedings.
From a technical standpoint, some points need to be clear:
- The absence of proceedings does not guarantee an unblemished reputation. Even without a lawsuit or conviction, the regulator may conclude that a person lacks an unblemished reputation if there are other relevant facts, such as:
- ongoing inquiries or investigations;
- consistent evidence of practices incompatible with integrity standards;
- a track record revealing high reputational risk; and/or
- repeated and qualified negative public exposure.
- 2.The criterion is not evidentiary; it is prudential. The regulator does not judge guilt but assesses risk. Media reports, reports by authorities, preliminary investigations and documented public facts may be considered, provided they are analyzed in a contextual, reasoned and proportionate manner.
- 3.An unblemished reputation requires institutional trust. The central point is whether the available facts, even if not litigated, affect the credibility of the controlling shareholder or manager before the financial system, its stakeholders and the regulator itself.
That is why the concept of unblemished reputation works both ways:
- Having a proceeding is not, in itself, enough to rule out an unblemished reputation; and
- Not having a proceeding is not, in itself, enough to recognize it.
This does not make unblemished reputation an arbitrary criterion; it simply reinforces that it is neither binary nor reducible to a bureaucratic checklist. It is a deliberately open legal concept that requires weighing, reasoning and risk analysis.
This is not a flaw in the system but a structural feature of the regulatory regime, which requires forward-looking and prudential assessment rather than mere formal verification.
Link to the Estadão article: https://lnkd.in/dGj3QThx
