SAO PAULO, March 7 (Reuters) - Brazilian federal prosecutors and members of the securities industry watchdog are investigating investment consulting firm Empiricus Research for failing to warn clients about the risk of certain strategies, newspaper Valor Econômico reported on Tuesday.
According to Valor, which obtained access to a 175-page administrative probe by the watchdog known as CVM, the investigation began in November 2014, and new evidence was added as recently as last month.
Federal prosecutors have also started a criminal probe of São Paulo-based Empiricus, which focuses on retail clients, but has not filed any charges, Valor said.
In a statement, Empiricus said it was convinced it had not broken the law. "The company trusts authorities, with whom it has always cooperated, and is sure all questions will be duly answered," the statement said.
A spokeswoman for the Prosecutor General's office declined to comment, saying ongoing investigations are subject to legal secrecy. A CVM spokeswoman did not immediately answer calls.
Empiricus makes recommendations to investors through a series of market reports and videos as part of a subscription service. A new flurry of client complaints led the CVM to intensify a probe on the company even after it agreed to pay fines to a group representing market analysts in Brazil for failing to alert investors to the risks of suggested strategies, Valor said.
The company promised one of those strategies would "transform 1,000 reais ($321) into more than 150,000 reais in 32 days." Another invited clients to find out how to earn a 41 percent return in 40 days, the newspaper said.
Aggressive marketing of investment strategies, a source of risks for smaller, less knowledgeable investors, is difficult to penalize in Brazil. According to Valor, CVM has admitted that legal roadblocks could make it harder to punish Empiricus if found guilty.
The company, which was founded in 2009, has been the target of recent news articles questioning its model.
Financial blog Brazil Journal reported earlier this year that Empiricus was generating an annual 200 million reais in revenue from more than 150,000 subscribers to its service. More than 1 million people get its daily newsletter, the blog added.
$1 = 3.1188 reais Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn