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Sara Goldring, the head of two Uruguayan broker-dealers suspended by the local regulator for losing $100 million of their clients’ money, has accused the Montevideo Stock Exchange (BVM) of instigating a ‘witch-hunt’ against her and her family and of wanting to ‘liquidate’ her company.
The CVM and United Brokers firms, led by Goldring, were suspended from carrying out any financial activities on July 5 after it was found they failed to inform their clients that they had lost about $100 million. Shortly after, control of its operations were handed to representatives of the BVM.
Then on August 5, the Central Bank of Uruguay (BCU) removed the leadership team of CVM and United Brokers, namely Goldring and her two sons Martín Cukier Goldring and Daniel Cukier Goldring.
Goldring has previously fiercely denied claims that she had ‘scammed’ her clients and went even further last week in an open letter to the BVM, parts of which were published in Uruguayan newspaper El Observador.
In the letter, Goldring accused the market authority of wanting to ‘liquidate the operations of CVM and United Brokers’ and of a ‘witch-hunt’ against her and her family as it was ‘fearful that the difficulties that these companies had to face would provoke a more in-depth analysis by the BCU into the operations of BVM’s broker-dealer firms that will reveal frequent irregularities in their operations, which they seek to cover up with this cruelty against me and my family’.
In the two months since BVM took control of her firms, Goldring claims it missed the opportunity to ‘take advantage of the upward trend of the market, which would have allowed it to recover a large part of the losses suffered by the portfolio’.
‘Due to laziness, negligence or ignorance, the officials appointed by the BVM to carry out the intervention, Patricia Torrado and Marcela Rodríguez have refused to carry out any act of administration or conservation on the aforementioned portfolio, causing significant losses to customers,’ wrote Goldring.
CVM and United Brokers’ losses were due to the sale of put options at prices that were much higher than the shares underlying the put option contracts as of November 2021.
As a result, the ‘aggressive’ risk profile accounts went from a total balance of $110m as of June 30, 2021 to only $18m as of May 31, 2022, according to the regulator. This impacted about 80% of Goldring’s clients.
According to Goldring, 20% of the firms’ remaining clients ‘retain the full availability of their investments, and there is no impediment to their being repaid, if they so request.’
She continued: ‘Several of these investors have filed criminal complaints and civil actions, accusing me and my family of misappropriation, when it is the BVM and its officials who are misappropriating these resources by preventing them from being available to those who have legitimate legal access to said resources.’
The BCU justified its decision to intervene and remove CVM and United Brokers’ leadership stating that both companies ‘intentionally gave erroneous information’ to their clients about their positions, made ‘arbitrary management’ of the funds and securities using those of some clients to hedge positions of others.
Furthermore, the regulator claimed the firms made ‘arbitrary use of the free administration mandate’ and even carried out operations outside of market values to hide losses from clients.
The BCU believes that Goldring and her two sons committed a serious offense and eventually ‘certain behaviors could be classified as crimes’.
The case continues and more news and accusations will likely emerge in the coming weeks.
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