Our Partner Roberto Panucci was featured in an article by Broadcast | Agência Estado on the possible regulatory effects of BRB's delay in publishing its financial statements.
From a technical standpoint, it is important to separate the delay in itself from whatever may eventually arise from underlying facts established by the supervisory authority.
In the past, a delay in publishing financial statements, considered in isolation, has given rise to the following types of penalties:
- coercive/daily fine for failure to meet the deadline, within the scope of the Central Bank;
- administrative sanctioning proceedings, with penalties such as a warning or a monetary fine;
- in the case of a publicly held company, repercussions before the CVM as well.
In similar cases, only a monetary penalty was imposed, and the delay was not grounds for RAET, Intervention or Liquidation of the financial institutions that breached the rules. Accordingly, the Central Bank is not expected to impose a more severe sanction on BRB on account of such delay.
Any more severe measures would depend not on the delay itself, but on what the supervisory authority may establish regarding other aspects under review, such as financial capacity, adequacy of provisioning and the nature of the transactions carried out in recent years.
In the article, our Partner Roberto Panucci stated: "It is these underlying issues, and not the delay itself, that may, depending on what the supervisory authority establishes, justify more severe sanctions." Nevertheless, without access to the findings of the authorities, it is not possible to opine on what such possible sanctions would be.
If any stronger consequence arises in a specific case, it should not be read as a new standard for cases of delay in Financial Statements. A proper regulatory assessment depends on separating the delay in itself from any underlying circumstances that may be established, and it is precisely this distinction that allows the risk to be measured and the appropriate legal strategy to be defined.
