"Invest in cattle": the agricultural promotion that the BCU ordered to stop

“Invest in cattle”: the agricultural promotion that the BCU ordered to stop

The Central Bank (BCU) continues to focus on the promotions carried out by agricultural companies to attract investment. He recently targeted another company in the sector and asked it to stop advertising a product until it presents the documentation required by the bank.

The Superintendence of Financial Services of the BCU issued a resolution on May 23 referring to the agricultural integration company.

There, he stated that the company defines itself as “a company dedicated to detecting and managing the best agricultural business opportunities” and adds that it has “extensive experience in the area and in-depth knowledge of the market, which allows it to discover favorable opportunities and carry out successful”. Also that the company offers “financial services” and “agribusiness”, including the “livestock investment” product and an “investment simulator”.

He added that on his website and on Facebook he posted videos in which he reported having managed capital of more than 50 private investors for more than US$ 20 million.

In order to learn more about the company, he was asked to provide his identification data, main activity, legal form and accounting statements, in others, and also about the products “financial services” and “agribusiness” submit a copy of all contracts, in particularly those about to be signed, prospectuses and brochures.

Hereford Uruguay

A first response from the company was that there were no “contracts involving Agricultural Integration, nor is advertising done” and that “social networks are not used to make publications, advertisements, or offers, or promote any product or service to customers ”.

From that date to the beginning of this year, there were requests for information and responses from the company to the superintendency.

The resolution indicated that in February the director of the company appeared without providing the documentation expressly required by the superintendency, for which reason the “without having objective elements that would allow the proper establishment of the operation carried out”.

Then, the superintendency stated that the primary purpose of the BCU is the regulation of the operation and supervision of the financial system and that it has the power to authorize or prohibit, in whole or in part, operations in general or in particular. He informed that the superintendency, within the scope of its competence, dictates the standards to which the securities markets and the natural or legal persons that intervene in them must comply.

He considered that although no impediments were observed for a company to offer investment products through an individually negotiated private offer, a “very different issue is the general and impersonal appeal to attract financial resources from the public.”

"Invest in cattle": the agricultural promotion that the BCU ordered to stop

Diego Battiste

For the BCU, the activity carried out and advertised on the Agricultural Integration website and materialized in the contracts called “Livestock Capitalization Contract”, implies receiving money from individuals through a call without providing elements that allow ruling out a financial business. He added that the activity offers the promise of a fixed return, so an impersonal call to save is being made.

The final decision

The BCU explained that from the company the required documentation was not provided and therefore it was not possible to confirm with certainty the actual operations carried outTherefore, it cannot be ruled out that the activity carried out falls within the regulatory perimeter of the Superintendence of Financial Services. The resolution added other inconsistencies and did not consider any of the company’s arguments to be accepted. Despite that, decided not to apply a sanction to the company but rather was given an instruction to comply.

In another passage the resolution stated that the company’s website and Facebook are still promoting capitalization of cattle and capitalization contracts.

It added that up to the date of the letter the company did not provide the information that was requested and consequently it was not possible to confirm the true activity carried out by Integración Agropecuaria.

With the foregoing, the Superintendence of Financial Services resolved instruct the company to “cease all communication addressed to the general public and in an impersonal manner” that offers the product called “Investment in cattle”, “Invest in cattle”, “Cattle business”, “Cattle business” or any other product that involves attracting financial resources from the public. The cessation of the communication must be carried out until the pending documentation is presented to the Superintendence of Financial Services.

The BCU has already made similar decisions with other companies that promote agricultural products to attract investment.

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