Short Selling In Connection With A Public Offering In Brazil

Among its duties, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) shall promote the expansion and the regular and efficient operation of the Brazilian stock market, and stimulate permanent investments in the capital stock of publicly-held corporations controlled by local private capital, as well as it shall avoid or prevent any kind of fraud or manipulation intended to create artificial conditions of supply, demand or price of the securities traded on the market.

Pricing integrity is essential to the capital raising process and CVM recently enacted specific rules of protection to the price formation process in the context of stock public offerings, by means of CVM Instruction No. 530, of November 22, 2012 (CVM Instr. 530/2012).