Mexico's Banking and Securities Commission is preparing to levy stiff fines against several financial institutions for sales practices and business conduct that violated local securities rules, and which might have led to outsize losses for local retail investors during last year's global financial crisis.
"We are talking about strong sanctions against financial intermediaries and prolonged suspensions for those sales agents whose conduct was inadequate," Guillermo Babatz, president of the CNBV, as the commission is known, said in an interview.
Mexican law prohibits the CNBV from naming firms and individuals that are under investigation or subject to sanctions until they agree to pay the fines or exhaust all court appeals.
The retail investor community, which includes individuals as well as corporate treasury desks, is thought to be small and does most of its business through brokerage houses and banks. Brokerage firms had nearly 200,000 clients at the end of June, according to CNBV data.
The pending sanctions are the result of on-site inspections and investigations by the CNBV during the last 12 months that brought to light dubious practices, including financial advisors that steered their clients to directly invest in a handful of securities instead of seeking greater diversification through other investment vehicles such as mutual funds.