By Brazil Stock Guide – Brazil’s market for structured notes — known locally as Certificados de Operações Estruturadas (COEs) — is facing its worst reputational crisis since the product gained popularity among retail investors. Recent complaints against XP Investimentos and BTG Pactual point to the mis-selling of high-risk products to moderate clients, unilateral liquidations, and even leveraged transactions involving undisclosed loans.
Taken together, the cases reveal a striking gap between the complexity of these instruments and the financial literacy of the clients to whom they were offered. XP and BTG declined to comment when contacted by Brazil Stock Guide.
XP: Forced Liquidations and Suitability Failures
Most of the complaints, filed on consumer-protection website Reclame Aqui, target XP and involve COEs linked to Ambipar (B3: AMBP3), Braskem (B3: BRKM5) and Casas Bahia (B3: BHIA3). Investors report losses ranging from 80% to 94% after the brokerage unilaterally liquidated positions. In São Leopoldo, Rio Grande do Sul, one client said he invested R$180,000 COEs linket to Ambipar and received only R$12,000 back. Another, in Campinas, São Paulo state, reported a R$267,000 loss and called the transaction an “offense to public savings,” urging the state prosecutor’s office to intervene.
The most emblematic case involves a São Paulo client with a moderate risk profile who was advised to invest R$100,000 in an Ambipar-linked COE internally classified as “high risk – level 70.” “I trusted them because this was the savings of a lifetime,” the client wrote. “Now I’m left with R$17,567. No one ever warned me about the real risk.”
Documents attached to his complaint show that his profile (27 points) did not allow exposure above the 25-point risk limit established by XP’s own system.
These notes, originally maturing in 2031, were terminated early after knock-out clauses were triggered, returning between 6.88% and 36% of the invested capital.
Legal experts told Brazil Stock Guide that, while such provisions are contractual, there are strong indications of a suitability breach — meaning a product was sold to a client with an incompatible risk tolerance.
“When an adviser recommends COEs backed by high-risk corporate debt to moderate investors, that’s a fiduciary failure,” said a financial-litigation lawyer. “XP failed to communicate the risk properly and to supervise its own adviser network.”
BTG: Hidden Loans and Disguised Credit Risk
The issue is not limited to XP. In Carapicuíba, São Paulo state, an investor said he was induced to invest R$550,000 in a BTG Pactual COE, with the promise of an additional R$187,500 that would “earn interest together” with the investment. Only recently did he discover that the extra amount was in fact a loan tied to the transaction — on which he has been paying monthly interest equal to 100% of the CDI, Brazil’s interbank benchmark rate.
“I’ve already paid over R$100,000 in interest, and no one can tell me how much I’ll actually get back,” the investor said. “The money is stuck in an illiquid asset linked to debt that nobody wanted to buy,” referring to a credit issuance connected to Casas Bahia.
He estimates his loss at R$270,000 and says BTG offered no support: the original adviser moved abroad, the second suffered an accident, and the current one “no longer returns my calls.”
The case expands the scope of alleged misconduct: beyond unsuitable advice and forced liquidation, there are signs of tied selling and concealed leverage — the client was exposed to a structured credit operation without being told he was effectively taking out a loan embedded in derivatives.
“This kind of hybrid funding-plus-credit structure should be restricted to professional or qualified investors,” said a financial lawyer. “If sold to retail clients without full disclosure, it may breach both information-duty and CVM suitability rules.”
Regulators and Prosecutors Step In
Multiple complaints filed on website Reclame Aqui are now being forwarded to Brazil’s Securities and Exchange Commission (CVM) and to the São Paulo State Prosecutor’s Office (MP-SP). There are two main allegations: Mis-selling and suitability violations, under CVM Instruction 539/2013 and Brazil’s Consumer Defense Code; and Offenses against public savings, a category that allows collective legal action when the harm affects a broad group of retail investors.
Regulatory Pressure Mounts
The episode is adding pressure on the CVM to tighten oversight of structured-note offerings — particularly those backed by private-credit assets, whose issuance surged more than 200% between 2021 and 2024, according to market data. The outstanding stock of such structured notes has reached about R$ 90 billion in Brazil.