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Venezuela Tightens Rules on Brokerage Takeovers After Crackdown

Dec. 7 (Bloomberg) -- Venezuela tightened rules for the securities regulator to take control of brokerages after a financial crackdown this year led to more than 40 firms being seized and the closing of nine.

Government-assigned receivers must present their audit of the brokerage within 180 days of the takeover, and the regulator will then have 30 days to decide whether to close the firm or rehabilitate it, according to a resolution published today in the Official Gazette.

President Hugo Chavez closed the unregulated currency market in May that was run by brokerages after consumer prices rose 5.2 percent in April. Chavez blamed the traders for setting artificial exchange rates, laundering money and fueling capital flight.

More than 30 brokerages that were taken over by the government this year continue to wait for the final decision on whether the business will be closed definitively or reopened.

The government also passed legislation to prohibit brokerages from trading government dollar bonds and from participating in a currency market at the central bank.

The license to operate a brokerage may be revoked even if the firm is reopened, according to the resolution. Receivers must seek approval to make “significant transactions” with brokerage capital.

Government takeovers of brokerages shouldn’t last for more than eight months, the resolution said.

To contact the reporter on this story: Corina Rodriguez Pons in Caracas at crpons@bloomberg.net; Daniel Cancel in Caracas at dcancel@bloomberg.net.

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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