Sanction for unauthorized public offering of securities

Pursuant to Resolution No 26.938 dated July 31, 2008, the Argentine Securities and Exchange Commission (“Comisión Nacional de Valores” - “CNV”) imposed a warning on the Catamarca Stock Exchange (“Bolsa de Comercio de Catamarca” - “BCC”) and the members of its board of directors and surveillance committee for unauthorized public offering of securities in violation of Sections 16 and 28 of Argentine Securities Law No 17,811 and Sections 1, 24 and 28(b)(1) of Chapter XVII of the CNV Rules. Notwithstanding, the CNV absolved all persons subject to the summary proceedings in connection with the charge of infringing Section 8(a) of Chapter XXVII of the CNV Rules (which provides that only authorized intermediaries registered in stock markets or organized over-the-counter markets may engage in the public offering of securities, futures, forwards and options) based on the fact that stock exchanges are markets where securities are traded and not intermediaries which engage in the public offering of securities.

The CNV commenced the summary proceeding as a consequence of an article posted in an on-line version of local newspaper in the Argentine province of Catamarca that presented BCC as a new investment alternative for local investors even though BCC was not authorized to operate as a stock exchange.

While analyzing the facts, the CNV concluded that activities conducted by BCC met all three requirements applicable to the concept public offering:

(i)            an invitation directed to the public at large or certain sectors or groups thereof (in the present case, local investors),

(ii)            in order to enter in any transaction involving securities, and

(iii)            made through any means of communication.

The CNV ratified the criteria that the infringement to the prohibition to make public offering of securities is committed in the event that the requirements listed above are met without regard of the specific factual events on which the case took place, such as the absence of transactions conducted by BCC, the lack of administrative organization in order to conduct such activities, the actual effect of the advertisement made by BCC, and the lack of ability of BCC to conduct the activities advertised. In addition, the CNV did not consider relevant that after the commencement of the summary, BCC filed before the CNV a petition to obtain an authorization to operate as stock exchange.

Finally, and in order to determine the type of sanction applicable to BCC, the CNV considered as a mitigating circumstance the absence of recidivism by BCC but considered as an aggravating factor that several individuals subject to the summary proceedings are professionals with experience in banking and capital markets.