/ On-going reporting obligations: CMF enforcement actions against 13 private fund managers

With these sanctions, the Financial Market Commission gives the message to comply with reporting obligations, no matter how trivial they are.

Felipe von Unger V.
Associate

Felipe Cousiño P.
Partner

Alessandri Attorneys at Law

By means of Exempt Resolution No. 422, dated January 12, 2023, the Financial Market Commission (CMF) applied sanctions to 13 private investment fund managers (AFIPs), for a total of 220 UF (several of them were only censured), for failing to comply with the reporting obligation contained in Article 94 of Law No. 20,712 (“Chile Funds Law”). Said article, together with General Applicability Rule (NCG) No. 364, obliges the AFIPs to provide the CMF with information on:

a) Name of the private investment fund and taxpayer identification number, as provided in Article 86 of the Single Fund Law.

b) List of participants, including:

• ID No./taxpayer identification number, passport number or other type of identification.
• Full name.
• Total amount of the individual participation of the entity or person, expressed in Chilean pesos at the time of calculation.
• Total number of shares of the entity or person.

c) Value of the assets and liabilities of the fund, expressed in Chilean pesos at the time of calculation, indicating the main accounting criteria used to determine that value.

In addition, NCG No. 364 provides that “this information must refer to the last day of the month of the reporting quarter, i.e. March 31, June 30, September 30 and December 31 of each year, and be submitted within the first 5 business days of the three months following the reporting month”.

In view of the seriousness of the alleged violations, the CMF applied the simplified enforcement procedure provided for in paragraph 3 of Title IV of Decree Law No. 3,538 of 1980, which creates the Financial Market Commission. In order to do so, the different AFIPs had to admit their responsibility in the facts.

As additional background, it is worth noting that this is the seventh time since 2019 that the CMF applies sanctions to different AFIPs for violations to their on-going reporting obligations. In this last enforcement resolution, the supervisory authority has said that “the sanctioned conducts imply that this Service does not have all the information required by law regarding the private funds managed by these companies, in consideration of the characteristics of this type of funds, as well as the compliance with the purpose of the management companies”.

Both this and the previous cases are a call of attention to the different management companies to have clarity on the reporting obligations they must meet, and on the other requirements applicable to an increasingly regulated activity.