Brazil Shuts Down Two Brokerages Linked to Banco Master

Brazil's central bank has ordered the liquidation of Trustee and Banvox, two brokerages linked to the collapsed Banco Master, in a bid to stem the fallout from the sprawling banking scandal. Both firms, licensed as securities distributors, are controlled by Maurício Quadrado, a former business partner of Banco Master's founder Daniel Vorcaro.

Regulators have uncovered serious rule violations at Trustee and Banvox, including the misuse of client funds. The central bank, which shares oversight of these brokerages with the securities regulator CVM, immediately took control of both companies' assets and operations. The brokerages managed investment funds totaling about R$30 billion ($5.9 billion) for clients.

Police are investigating roughly 40 funds connected to Trustee and the wider Master group, which held R$30 billion in client money. Brazil's deposit guarantee fund reimbursed depositors after Banco Master's collapse, paying out about R$37.2 billion. Federal police accused Banco Master of running a pyramid scheme, using new client money to pay off older investors.

The central bank's order comes solely from it, despite CVM's shared oversight of DTVMs. The two brokerages are also part of a wider criminal investigation, Operation Carbono Oculto. A government-appointed liquidator now oversees Trustee and Banvox, assessing and selling their assets to repay creditors. However, details on how clients can recover their money are still pending.