Minor, serious and very serious infringements, public reprimand, disqualification from office and revocation of authorization: understand what is at stake in sanction proceedings and how to build a defense that does not come too late.
Sanction proceedings on the horizon? Let’s analyze them
Send us the order initiating proceedings or the letter you have received, and we will come back to you with an initial strategic reading.
Six building blocks to reduce your exposure: defend the proceedings already open and, above all, keep the next ones from being opened.
Written submissions, proposal of evidence, assistance with statements and appeals: we defend firms and executives before the CNMV on a clear premise: every filing stakes out positions, and none is improvised.
Almost all sanction proceedings stem from a poorly handled supervisory review. We prepare your responses to requests for information and inspections so that the matter ends at that stage.
Providing investment services without a license is a very serious infringement. Define the boundary before the supervisor draws it for you.
Inside information and manipulation: the most severe proceedings in the catalog of infringements. Specialized prevention and defense.
A control system that really works reduces infringements and counts in your favor when any sanction is graded.
Patterns of poorly resolved complaints end up feeding supervisory reviews and, with them, sanction proceedings.
Four typical clients in our sanctions practice: the strategy changes completely depending on who you are and what you are charged with.
“We have been served with an order initiating proceedings for shortcomings in conduct-of-business rules. We need to decide right now what we admit, what we contest and with what evidence.”
“The proceedings charge me personally as well as the firm, and disqualification would end my career. My defense cannot depend on the company’s lawyer.”
“We thought our app only provided information, but the CNMV takes the view that we had been providing a reserved service without authorization. We need to put this right with as little damage as possible.”
“There is an investigation into how we handled a piece of inside information. Beyond the fine, we are worried about the reputational blow of a published sanction.”
In sanction proceedings, past conduct is not the only thing being argued: the outcome also depends on what you do from the moment proceedings are initiated. These mistakes are costly.
Acting late and without a strategy: the first filings define the facts and legal classification for the entire proceedings. Answering just to get it over with hands the investigating officer a narrative that will then take years to dispute.
Confusing sanction proceedings with supervision: once proceedings are opened, the presumption of innocence and the right of defense apply. Continuing to hand over information as if it were a routine request for information, without legal screening, is a classic mistake.
Looking only at the fine: publication of the sanction, a review of the fitness and propriety of the office holders concerned and the effect on clients and investors can hurt more than the amount itself. The defense must manage all three fronts.
| Severity | Examples of infringements | Typical consequences |
|---|---|---|
| Minor | One-off or formal breaches with no significant harm to clients or the market: isolated delays in submitting information, formal defects that can be remedied. | A fine at the lowest end of the range or a reprimand; little public impact, but they add to your supervisory record and count against you if you reoffend. |
| Serious | Significant shortcomings in conduct-of-business rules (suitability, cost disclosure), organizational or internal control failures, significant breaches of reporting or advertising rules. | A larger fine, possible public reprimand and temporary suspension of office holders; publication multiplies the reputational damage. |
| Very serious | Operating without authorization (reserved activity), market abuse, widespread or repeated breaches causing harm to investors, obstruction of inspection. | The highest fines in the catalog, disqualification of office holders, suspension of activities and even revocation of the authorization, with publication of the sanction. |
We analyze the order initiating proceedings, measure the real risk (fine, publication, office holders, license) and map out the strategy: opposition backed by evidence, negotiated termination or both. First consultation free of charge.
Law 6/2023 reserves the highest level for conduct that strikes at the heart of the system: providing investment services without authorization (the reserved activity), market abuse, widespread or repeated breaches of conduct-of-business rules causing harm to investors, or obstruction of the inspectors’ work.
If your question is where the reserved activity begins, we cover it in depth in can you give investment advice without a license?
Broadly speaking, serious infringements are significant breaches that do not reach the previous level: significant shortcomings in conduct-of-business rules, internal organization, reporting or advertising. Minor infringements are one-off or formal breaches without appreciable harm.
The line between levels depends on circumstances such as repetition, the harm caused or the scope of the conduct, and that is precisely where much of the defense is fought.
The Law sets fines in ranges that, depending on the case, are based on figures such as the profit obtained from the infringement or the size of the firm, and the specific amount is graded within each band. We do not publish figures here because what matters for your defense is not the theoretical maximum but where your case will fall within the range.
That is something you can work on: the grading criteria (subsequent conduct, cooperation, corrective measures) can be influenced with facts and evidence.
In addition to the fine, the decision may impose a public reprimand, suspension or disqualification from holding board or management positions in financial institutions and, in the most severe cases, revocation of the authorization of the firm.
For an executive, disqualification is usually the most feared consequence; for the firm, losing its license amounts to closing down. The defense strategy must prioritize these fronts from day one.
Yes: the rules provide for sanctions to be made public on the terms they set out, with particular visibility for those imposed for serious and very serious infringements. Publication works as an additional sanction: clients, counterparties, banks and the press can find it with a single search.
That is why a serious defense also manages the reputational front: communication with clients, responses to the media and consistency between what is argued in the proceedings and what is said outside them.
The usual sequence: possible preliminary investigations, an order initiating proceedings that appoints an investigating officer, the investigation stage (submissions, evidence, statement of charges), a proposed decision with a further hearing, and the decision, which can be challenged through administrative appeal and then before the courts.
Each stage has its window of opportunity; if you miss it, you cannot fix it at the next one.
Administrative procedure rules provide, in certain cases, for ways of ending proceedings linked to an acknowledgment of liability or to voluntary payment, with reductions in the fine. Assessing them requires a cool-headed calculation: what you gain in amount, what you accept as proven facts and what effect that has on publication, office holders and possible client claims.
It is a strategic decision, not a formality: making it well requires assessing the entire case file.
Directly: most sanction proceedings are initiated on the basis of what happened during supervision (requests for information, on-site inspections, findings letters). What you stated and provided then will form part of the case file.
The best sanctions defense therefore starts much earlier: by handling the supervisory stage well. We explain how in CNMV inspection.
From initiation to decision: the work sequence we follow to protect the firm and its office holders at each stage.
Analysis of the order initiating proceedings: facts alleged, legal classification, persons concerned and real risk (fine, publication, office holders, license). That reading produces the strategy: contest, negotiate termination or combine both.
Submissions with a clear structure: what is disputed in the facts, what in the classification and what in the grading. Useful proposals of evidence (expert, documentary, witness) and close control of every step taken by the investigating officer.
Hearing on the proposed decision, administrative appeal and, where appropriate, judicial review before the contentious-administrative courts. In parallel: documented remediation and reputational management of any publication.
If there are no proceedings yet but you can see the risk coming, work on prevention: CNMV inspection management and investment firm internal control are the two levers that prevent the most proceedings.
The 10 conduct controls the CNMV expects to see working at an EAF or investment firm, with the typical evidence for each one. Ideal as a quarterly self-assessment with your team.
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Nine concepts that set the pace of the proceedings. Knowing them helps you understand every notification and not miss any procedural window.
Decision that opens the proceedings: it identifies the facts, possible infringements, the persons allegedly responsible and the appointed investigating officer.
Period of submissions and taking of evidence in which the investigating officer forms a view on the facts and liabilities.
Document that specifies the conduct charged and its legal classification. Submissions and proposals of evidence are made in response to it.
The investigating officer’s conclusion, with the sanction proposed. It opens a new hearing before the final decision.
Criteria that adjust the sanction within each band: harm caused, repetition, cooperation, corrective measures adopted.
A formal reproach made public. No direct financial amount, but a reputational cost that can exceed the fine.
Temporary ban on holding board or management positions in entities in the sector. It affects your career, not just your current position.
Withdrawal of the firm’s authorization, reserved for the most severe cases. It amounts to closing the regulated business.
Investment services can only be provided with a license: doing so without one is a very serious infringement under Law 6/2023.
The supervisor decides whether there are grounds to initiate proceedings; everything you provide will feed the future case file.
Legal screening of every submission, consistency with what has already been reported and early correction of the weakness identified.
The scope is set: facts, provisional classification and persons charged, including senior officers.
Strategic reading, decision on separate defenses and an evidence-preservation plan from day one.
The investigating officer consolidates the narrative; whatever is not disputed and proven now will be very hard to reverse later.
Submissions that separate facts, classification and grading, with expert and documentary evidence aimed at the weak point of the charge.
The sanction is specified: fine, reprimand, suspension, disqualification or revocation, and its possible publication.
A hearing focused on what is decisive, with proof of remediation and cooperation to shift the grading.
Final legal review of the decision and management of the public impact of the sanction imposed.
A challenge with realistic expectations, analysis of interim measures and a communication plan for clients and the market.
Any of these situations requires rethinking the strategy immediately, not at the next procedural step.
Proceedings rarely come alone: there is almost always a supervisory review behind them, a pattern of complaints or conduct close to the reserved activity or to market abuse. Reviewing these fronts in time is the most effective way to reduce the total bill.
How requests for information and inspections unfold and how to manage them so that they do not end in proceedings.
Where information ends and the reserved service begins: the analysis that avoids the most severe infringement.
Inside information, manipulation and market disclosures: the sanctions chapter listed companies fear most.
Reports from the complaints service reveal patterns that supervisors make use of. Close them properly.
And if you want to shield your organization before the problem arrives, combine our legal advisory services with investment firm internal control and risk management, financial compliance and a review of your financial product advertising, a growing focus for the supervisor.
Tell us what stage the proceedings are at (preliminary investigations, initiation, statement of charges, decision) and we will build the defense with you from that point.
Law 6/2023 of March 17 on Securities Markets and Investment Services sets out the sanctioning powers of the CNMV over a catalog of minor, serious and very serious infringements that ranges from formal reporting defects to providing investment services without authorization. The consequences go far beyond the fine: public reprimand, suspension or disqualification of office holders in board and management positions, revocation of the authorization and publication of sanctions, with the reputational damage that entails. Understanding the regime, and the procedure through which it is applied, is the basis of any defense.
Understanding the logic of the levels is more useful than memorizing amounts. Very serious infringements punish conduct that undermines confidence in the market: operating without a license (the reserved activity), market abuse, widespread breaches causing harm to investors or obstruction of inspection. Serious infringements cover significant shortcomings in conduct, organization, reporting or advertising; minor ones, one-off breaches without appreciable harm. The line between levels is drawn by circumstances (repetition, scope, harm), and that is where a technical defense makes the difference.
Within each level, the specific sanction is graded using criteria such as the profit obtained, the harm caused, the duration of the conduct, cooperation with the supervisor or the corrective measures adopted: this is the ground where facts after the infringement can still change the outcome. Ancillary consequences may be added to the fine (public reprimand, suspension or disqualification of office holders, revocation of the authorization), as well as publication of the sanction, which turns the proceedings into a public fact with effects on clients, counterparties and financing. A complete defense works on all three fronts at once: amount, ancillary consequences and reputation.
The proceedings follow a recognizable sequence: preliminary investigations, order initiating proceedings, investigation with submissions and evidence, statement of charges, proposed decision with a hearing, and the final decision, which can be reviewed through administrative appeal and in the contentious-administrative courts. Each stage has its function and its window: evidence is proposed during the investigation, the grading is fought with documented remediation, and the final hearing is not the place to bring out new arguments. In addition, administrative rules provide in certain cases for ways of ending proceedings (termination) linked to an acknowledgment of liability or voluntary payment; whether they are advisable depends on calculating their effects on proven facts, office holders and publication.
Almost all sanction proceedings stem from a supervisory review: a request for information answered with contradictions, an inspection that found policies not being applied, an ignored pattern of complaints. That is why the most cost-effective prevention is to handle the CNMV supervision and inspection stage well and to maintain internal control that works rather than decorates. When proceedings already exist, our legal advisory team takes on the full defense of the firm and its executives, from the first reading of the order initiating proceedings to the last appeal.
Key legislation, linked to the official text:
Legislation and links reviewed in .