Consumer protection groups take action against XP for alleged failure to offer COE credit | Finance

According to the action, the loss of investors in the case of Ambipar (93%) was the materialization of information defects in the official documentation of the offer, behavior which would also have been identified in the debt-backed issues of seven other large companies and distributed by the platform. In the process, there is a request for “immediate exposure” of all COEs and respective essential documents of titles issued in the last 24 months, as well as their rectification.

In a note, XP Investimentos and Banco XP write that they act in accordance with the regulatory standards applicable to the offering of investment products, including the COE. “The company will analyze the content of the above-mentioned action and provide the necessary clarifications in the appropriate framework.” The company emphasizes that its COE structuring, documentation and distribution processes “follow strict governance criteria, with information made available to investors at the time of offering.”

According to Adilson Bolico, one of the lawyers signing the petition and partner at Mortari Bolico Advogados, the procedure calls for the suspension of sales, an audit and collective compensation of 100 million reais for the damage caused to the market. “The judicial investigation verified that the financial institution used official documents (DIE – essential information document) containing manifestly incorrect, inaccurate and misleading information in a systemic and repeated manner for years,” says Bolico, in a note.

According to him, to sell COEs linked to private corporate debt securities, XP used in the offering documents a risk description copied from others linked to sovereign bonds. The text specified that the underlying asset was an “external public debt security”, that is to say a security issued by the National Treasury.

In the action, Bolico claims to present documentary evidence that this false clause was not an isolated case, but reproduced in debt-related products of several companies, including Braskem, Cosan, Minerva, FS Luxembourg, Iochpe-Maxion, Aegea Finance and Movida. Essential information documents, collected on the XP site, are attached to the procedure.

In the case of Ambipar, faced with a financial crisis, the company’s securities collapsed. “As a result, XP triggered the early maturity provided for in the contract and the investors only recovered approximately 7% of the capital invested (real loss of 93%), discovering to their cost that there was not the security of the ‘National Treasure’ promised in the risk clause of the document,” writes the lawyer. In the offers containing such information, there is no explicit mention of the Treasury, but the texts specify that “the underlying asset is an external public debt security issued by the issuer”.

The suit alleges that XP operates an “assembly line” of products with quality defects, “in violation of compliance and adequacy obligations,” meaning regulatory compliance and investor profiling.

According to Cláudio Pires Ferreira, president of the associations, who also signed the petition as a lawyer, investors with a conservative or moderate profile bought corporate risk with “high yield”, believing in the description of the document. However, there was a scoring omission. “The documents omitted that companies like Ambipar held debt securities with a BB- ​​(speculative grade/”junk bond”) risk rating, crucial information hidden from retail investors,” he said in a note. The exposure to the exchange rate in the event of losses, triggered by the variation in the price of the asset in dollars, would also not have been explained.