Toffoli Flags Market Vulnerabilities as Master/Reag Probe Enters New Phase

Overview

• Supreme Court minister Dias Toffoli authorized a second phase of Operation Compliance Zero and said the suspected scheme systematically exploited weaknesses in market regulation and supervision.
• His ruling details allegations that investment funds moved illiquid, artificially priced assets through repeated related‑party transactions controlled by linked individuals.
• At a Planalto meeting, participants expressed discomfort with STF and TCU actions in the Master case as officials focused on tighter cross‑agency coordination to counter organized crime.
• Following a rare joint note from banks defending the central bank’s autonomy, the TCU and Banco Central negotiated a limited inspection expected to last about a month rather than any attempt to reverse the liquidation.
• Finance Minister Fernando Haddad endorsed the central bank’s handling and said the case may be Brazil’s largest banking fraud, while the FGC reimburses investors and investigators review seized data linked to controller Daniel Vorcaro.