Brasilia and São Paulo - Weakened by a low staffing structure and accused of suffering political interference, the Securities and Exchange Commission (CVM) is the latest target in the Master case and has come under the government's scrutiny, which signals a transfer of supervision over investment funds to the Central Bank (BC), in a direct response to the Centrão's attempts at political appointments and influence.
The strategy, led by the Ministry of Finance under Fernando Haddad , to propose a law to strip power from the CVM (Brazilian Securities and Exchange Commission) is being discussed internally within the Executive branch. The Ministry of Finance, the Central Bank, the Ministry of Management, and the Attorney General's Office (AGU) are participating, but the project has not yet even gone to the Civil House, which needs to carry out the final validation before sending it to the National Congress.
Government sources following the issue told NeoFeed that the idea is not to "weaken the CVM," as Haddad's initiative initially sounded. Rather, it is to divide the roles between the two bodies in overseeing investment funds in Brazil, a competence that has been exclusive to the CVM for 24 years.
So far, the discussion revolves around shared supervision, in which the Central Bank would be responsible for prudential regulation and the Securities and Exchange Commission (CVM) would be responsible for regulating conduct (protecting products and investors).
“The recent appointments to the board are an attempt to establish the influence of the Centrão [a group of center-right political parties] over the CVM [Brazilian Securities and Exchange Commission]. The government's attempt to move the supervision of funds to the Central Bank is a reaction to this move. This would weaken the Centrão's control over the supervision of funds,” says a source in Brasília who is directly following the matter.
NeoFeed spoke with several fund managers to understand how they evaluate Minister Haddad's proposal. In their opinion, the responsibilities are different and it wouldn't make sense to simply give more responsibility to the Central Bank, which should focus on regulating the financial system and systemic risks.
This was the sectoral regulation that Brazil adopted: leaving the capital market in the hands of the CVM (Securities and Exchange Commission of Brazil), the financial market with the Central Bank, the pension system with Previc (National Superintendence of Complementary Pension Funds), and insurance with Susep (Superintendence of Private Insurance).
This model is also used in other jurisdictions, such as the United States, where the Securities and Exchange Commission (SEC) regulates and oversees the capital market and the Federal Reserve (Fed) supervises and regulates part of the banking system.
Another model would be the Twin Peaks model, which would divide supervision into axes rather than sectors: prudential supervision (solvency and stability) and market conduct (behavior and protection of clients and investors). Examples of this model are the United Kingdom and Australia.
“I understand that Haddad may have mixed up the concepts because the super Central Bank wouldn't necessarily be Twin Peaks, a debate that is rich in discussion as to whether it makes sense. But the truth is that this is difficult in Brazil, as it means concentrating power and reducing public positions,” analyzes one manager.
For the capital market, there is no doubt that the CVM (Brazilian Securities and Exchange Commission) regulates the market well in its current model. Although often at a slower pace than desired, the proposed regulations are generally always well received, and the public consultations for their formulation always provide an opportunity for the market to raise concerns and offer its considerations.
However, when it comes to enforcing these rules, the practice leaves much to be desired.
“Like many things in Brazil, the rules created are good, but the enforcement of them is poor. But that doesn't mean the solution is to remove this responsibility from the CVM. The right thing to do is to attack the problem and understand why this doesn't happen,” says another manager.
The market understands that there may have been failures in the oversight of Master and Reag funds. The consensus is that everyone found Reag's rapid growth very suspicious and how opaque the structures were, making it difficult to understand where the money was coming from.
The regulator has to periodically request information from the funds that should trigger a red flag and warrant an investigation. An example is information about the investors and who the owners are.
“A common criticism is that the CVM (Brazilian Securities and Exchange Commission) should act more proactively, rather than reactively to problems. But in the case of Master, it's fair to say that the Central Bank acted in the same way,” analyzes one manager.
The interpretation is that the Central Bank acted, but only after the problem had escalated to major proportions. The oversight of CDB issuance and the annual reference reports submitted to it should also have identified problems years ago, since it is now known that auditors left some reservations in their audits.
Another issue that arises is that the Central Bank recently achieved its autonomy with Complementary Law 179/2021, while the CVM (Brazilian Securities and Exchange Commission) did not. However, there is a provision for stability of directors with fixed five-year terms, and as a rule, they only lose their mandate in specific cases, such as resignation, a final and unappealable court conviction, and disciplinary administrative proceedings.
Political interference in the local authority has been closely watched by the market. "If the local authority experiences political interference and acts with bias, it doesn't matter how well-equipped it is. We will continue to have the problem that some cases are mysteriously overlooked more than others," says one manager.
President-nominated
Before the latest chapter of the Master case broke, revealing an irregular scheme by the bank with funds in the second part of Operation Compliance Zero , President Luiz Inácio Lula da Silva (PT) nominated Otto Lobo for the presidency and Igor Muniz for a directorship at the CVM on January 7th. This triggered further alerts among market participants, civil servants, and regulatory experts regarding political pressure from the Centrão (center-right bloc) on the agency, as well as fears that the competition for positions might ultimately influence the profile of the board.
Even Lobo's approval by the Senate – mandatory according to the law – is considered uncertain in Brasília. First, he needs to be questioned by the House's Economic Affairs Committee (CAE), whose president, Senator Renan Calheiros (MDB-AL), created a working group to investigate the Master frauds and has already included the CVM (Brazilian Securities and Exchange Commission) among the possible targets of this committee. And then, he still needs to go through the plenary session.
Speaking to NeoFeed , Calheiros anticipated that he believes the regulatory body was negligent in overseeing funds linked to Master. However, it remains uncertain whether the Senate president, Davi Alcolumbre (União-AP), will hold back the nomination or release it to the CAE (Committee on Economic Affairs).
Within the economic team, Lobo is even considered a technically qualified and prepared figure, but linked to the political sphere, he did not have support, much less was he Haddad's preferred candidate, recalls a source from the economic team. He is a lawyer by training.
Director of the CVM (Brazilian Securities and Exchange Commission) between 2022 and 2025, his performance at the agency, where he remained until December 31 – Lobo even served as interim president of the agency last year, following the resignation of João Pedro Nascimento – is considered controversial: he made decisions that allegedly benefited Master.
His nomination for the presidency was accompanied by controversy, with questions and requests for warnings to the Senate regarding past decisions, including the request for a review of the public takeover bid (OPA) for Ambipar, which has an intersection with Master.
The CVM's technical area had already considered the offer necessary, and in the agency's plenary session, the former president of the CVM, Nascimento, aligned himself with this understanding. However, in July of last year, Otto Lobo, then a director of the CVM, requested a review of the process. When the case returned to the agenda, the legal expert argued that there was no obligation for a takeover bid, and his position prevailed in the collegiate body.
The understanding within some of the market today is that there were fears that the takeover bid would lead to a multi-billion dollar outlay, which could put pressure on Ambipar 's cash flow and debt. This would put the company's financiers at risk, as they would be subject to default, one of the main ones being Banco Master. João Pedro Nascimento resigned as president of the CVM (Brazilian Securities and Exchange Commission) last July as well. And the understanding within the market and among people close to him is that there was political pressure behind this.
Another case revolved around the investigation of alleged irregularities in investment funds linked to Banco Master and Daniel Vorcaro . To close the proceedings without a judgment on the merits, the investigated parties submitted a proposed settlement agreement to the regulatory body.
The topic was placed on the committee's agenda, but the process took on a different pace when Otto Lobo requested a review. The item was then left off the plenary agenda for months. It only returned to the table on December 2nd. By that time, Banco Master had already undergone extrajudicial liquidation.
NeoFeed asked several managers and market agents about the choice of Otto Lobo to head the CVM (Brazilian Securities and Exchange Commission). Most believe that his political appointment, coming from the Centrão (a political bloc in Brazil), is already causing concern, and that some of his decisions reported in the press are also raising concerns.
For many, there are signs of conflicts of interest. "His decision at Ambipar was very strange. And if he is well-regarded by the Centrão [a political bloc in Brazil], it can't be a good thing," said one manager on condition of anonymity.
The reporters attempted to contact Lobo, but received no response.
Vacant director positions
The CVM board began 2026 with only two of the five seats filled (João Carlos Accioly and Marina Coppola), leaving one vacancy for president and two for directors.
After President Lula nominated Otto Lobo and Muniz for two of these positions, SindCVM, the national union of CVM employees, released a statement on January 14th defending that the last vacancy should be filled by a career employee, arguing that this reinforces institutional continuity, regulatory memory, and understanding of supervisory and auditing routines, citing a recommendation from the Federal Court of Accounts (TCU) on the matter.
Last year, the CVM (Brazilian Securities and Exchange Commission) had submitted three names to the government: Antonio Carlos Berwanger, Fernando Soares Vieira, and Carlos Guilherme de Paula Aguiar.
The defense of the "name of the house" gained traction outside the CVM. Apimec Brasil endorsed the statement and said that the presence of a career director contributes to regulatory stability and the quality of collegiate decisions, even pointing to a reference to the understanding of the TCU (Brazilian Federal Court of Accounts). And Amec suggested that, historically, a technical representative on the board has brought "diversity" and would be an alternative to give prestige to civil servants.
However, this last position seems to be in a tug-of-war: on one side, pressure for a technical-institutional profile; on the other, political maneuvering and candidacies of external profiles, with names circulating in Brasília and in the market.
precarious structure
When capital market participants criticize the CVM (Brazilian Securities and Exchange Commission) for some lack of oversight, they always point out that it is difficult to condemn an agency that lacks the necessary infrastructure to operate, whether due to a lack of professionals or a lack of budget to invest in technology.
NeoFeed spoke with current and former CVM employees, as well as SindCVM and CVM itself, to understand this situation.
The major problem regarding manpower is that while the Brazilian capital market has multiplied its presence in the economy—in volume, complexity, and number of participants—the CVM (Brazilian Securities and Exchange Commission) has not gained more positions, and has even seen its staff decrease.
The numbers help to put the problem into perspective. According to data from the CVM Economic Bulletin, prepared by the Economic Analysis, Risk Management and Integrity Advisory (ASA), the number of regulated participants increased from approximately 28,000 in 2015 to around 92,000 in 2025.
The number of stock market investors grew from approximately 590,000 to approximately 6 million in the same period, while the number of investors in investment funds increased from approximately 11 million to approximately 43 million. And the "market under CVM regulation" grew by 430% between 2014 and 2023, reaching R$ 49.5 trillion in 2023 (the most recent figure available).
In addition to this quantitative growth, in recent years the CVM has incorporated new legal responsibilities, including the regulation of agricultural financing, the carbon market, securitization, crowdfunding , and tokenization, which has increased the complexity and scope of its regulatory and supervisory activities.
On the other hand, the number of senior-level employees fell from 368 to 295.
The issue was the subject of an open letter "in support of institutional enhancement" in July 2025 from the regulatory body, signed by several entities, such as Abrasca – Brazilian Association of Publicly Held Companies; Ancord - National Association of Brokerage and Distribution Firms of Securities, Foreign Exchange and Commodities; and Apimec Brasil - Association of Analysts and Investment Professionals of the Brazilian Capital Market.
In a statement, the CVM (Brazilian Securities and Exchange Commission) affirms that it had 519 active employees in 2015, a number that dropped to 482 in 2025, representing an approximate reduction of 7% during that period. A significant portion of the current staff already meets the requirements for retirement. Currently, 44 employees are on extended service, a number that is expected to increase by another 6 employees throughout 2026.
A quantitative study conducted by the CVM's technical areas demonstrated the need to expand the number of federal capital market inspector positions authorized by law by an additional 544, currently set at 386 positions, in order to align the Authority's workforce with the complexity, volume, and sophistication of the markets under its supervision.
The last CVM (Brazilian Securities and Exchange Commission) recruitment process was authorized in 2023 by the Ministry of Finance with 60 positions, 12 years after the previous one. This was a victory for the then-president of the agency, João Pedro Nascimento, who had repeatedly warned that the staff was understaffed.
Although the competitive examination filled the open positions, the current CVM (Brazilian Securities and Exchange Commission) staff structure was defined by law in 2008. To update it, the executive branch needs to send a bill to Congress expanding the number of positions. Without this, it is impossible to appoint the approved candidates from the last examination or to hold new ones.
According to NeoFeed , the Ministry of Management and Innovation (MGI), responsible for authorizing federal public service exams in the country, reported that since 2023, 90 new civil servants have been appointed through a competitive exam and one subsequent call for applications.
Regarding the discretionary budget, the CVM (Brazilian Securities and Exchange Commission) reported in a statement that the resources allocated in the Annual Budget Law (LOA) decreased from R$ 61 million in 2015 to R$ 36 million in 2025, representing a reduction of approximately 40%.
For 2026, the Annual Budget Bill foresees a discretionary budget of approximately R$ 47 million, a level equivalent to that authorized in the 2016 Annual Budget Law.
But it's not accurate to say there's a lack of resources, as the CVM (Brazilian Securities and Exchange Commission) is in surplus. It collects around R$ 2.1 billion annually in fees and in terms of commitments and judicial gains. However, by law, these resources go to the National Treasury, and only R$ 350 million return annually to the CVM.
“The central issue lies in the lack of transfer of what the CVM already collects, without depending on a single cent of taxpayer money. With this amount, much more could be invested in technology and supervisory systems, including fraud control,” says Oswaldo Molarino Filho, president of SindCVM.
The open letter from July 2025 goes in the same direction, defending "the proper allocation of resources linked to its core activity." A demand that, according to the entities, had already been made in a joint statement in 2024.
The argument is that the institutional strengthening of the CVM (Brazilian Securities and Exchange Commission) "continuously requires" that the fees collected to oversee the market actually return to the oversight activity, as a condition for keeping pace with "the evolution and increasing complexity of the market."
The friction, therefore, lies not only in the budget that appears at the end of the day, but in the financing arrangement that—according to civil servants and part of the market—transforms a regulator with a surplus into a permanently constrained body.
