What powers do national financial services authorities have to examine and investigate compliance? What enforcement powers do they have for compliance breaches? How is compliance examined and enforced in practice?
The national financial services authorities - namely the Bank of Portugal, the CMVM and the ASF - enjoy a wide array of powers to examine and investigate compliance with financial services regulations. In general, they may request any information or examine registry books, ledgers and other documents. The financial entities may not hamper such examination by availing themselves of professional secrecy rules. The national financial services authorities may also hear any person, including by way of summons, and conduct on-site examinations - upon the issuance of a court warrant - with the assistance of other entities (including the police authorities). There is also a publicly available channel dedicated to collecting information related to compliance breaches.
With regard to the enforcement of compliance breaches, the national financial services authorities have the general power to substitute financial services firms in discharging their disclosure obligations when the firms have failed to do so. They may also disclose compliance breaches to the public. In the specific case of entities managing regulated markets and multilateral trading facilities, clearing houses, central securities depositories, and central counterparties, the CMVM may replace these entities if they do not carry out the necessary measures to ensure the regular functioning of the markets. Furthermore, the CMVM may determine that an entity reduces or does not increase its exposure to financial instruments and may prohibit or limit the distribution or sale of financial instruments and the performance of a given activity or financial practice.
In practice, the investigation of compliance is usually carried out through:
- requests for information; or
- the examination or registry books, ledgers and other documents, often further to a complaint made through the available channel dedicated to collecting information related to compliance breaches.
What are the powers of national financial services authorities to discipline or punish infractions? Which other bodies are responsible for criminal enforcement relating to compliance violations?
The national financial services authorities hold administrative powers, but do not hold civil or criminal powers. Their powers include the right to impose fines and ancillary sanctions (see question 12).
The power of criminal enforcement lies exclusively with the public prosecutor and the Portuguese criminal courts.Tribunals
What tribunals adjudicate criminal and civil financial services infractions?
Financial services civil liability is adjudicated by the Portuguese civil courts and any regulatory infractions are adjudicated by the Court of Competition, Regulation and Supervision.
Financial services criminal infractions are adjudicated by the Portuguese criminal courts. If a specific crime also caused civil damages, the criminal court may, in addition to the criminal conviction, award damages to the wronged party.Penalties
What are typical sanctions imposed against firms and individuals for violations? Are settlements common?
Typical sanctions are:
- pecuniary fines;
- loss of the economic benefit obtained from the infraction;
- loss of the object of the infraction;
- public disclosure of the final decision;
- when the offender is a natural person, the prohibition to serve in corporate bodies or in any senior management positions of any financial entities for a specific period, up to a maximum of 10 years; and
- suspension of the exercise of the voting rights held by shareholders in entities that are subject to the supervision of the Bank of Portugal, for a period ranging from one to 10 years.
Settlements, understood as an agreement between the relevant authority - either the regulator or a court - and the offender, are not regulated under Portuguese law. This means that a final decision shall be unilaterally reached by the relevant authority. The respondent will then have the right to accept the decision or appeal.
Appeals against decisions made by the regulator are filed with the Court of Competition, Regulation and Supervision. Appeals against court decisions are filed with the relevant upper level court.