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Washington, DC, March 25, 2020 – Due to the apparent failure to disclose Alfonso Romo Garza’s wife Consuelo Lourdes Garza Laguera as a significant owner in a Miami-based investment adviser through her stake in Mexico’s Vector Casa de Bolsa, the United Food and Commercial Workers International Union (UFCW) requested an investigation into the investment adviser, VectorGlobal IAG, by the United States Securities and Exchange Commission (SEC). Vector Casa de Bolsa wholly owns VectorGlobal IAG.
The SEC requires registered investment advisors to disclose owners who indirectly hold more than 25% of the advisor. Vector Casa de Bolsa wholly owns both VectorGlobal IAG and registered broker-dealer VectorGlobal WMG. VectorGlobal WMG recently disclosed that Consuelo Lourdes Garza Laguera owned more than 25% of Vector Casa de Bolsa. Despite the same disclosure requirement, VectorGlobal IAG did not make any disclosure about Consuelo Lourdes Garza Laguera indirectly owning more than 25% of IAG in its annual SEC update filed March 12, 2020.
Additionally, Vector Casa de Bolsa reported in Mexican stock exchange filings that Plenus SA de CV owned more than 25% of Vector Casa de Bolsa for a minimum period of July 2017 through August 2018. Despite this, VectorGlobal IAG did not disclose that Plenus indirectly owned more than 25% of IAG through Vector Casa de Bolsa on three separate occasions during this 2017 to 2018 period.
“We discovered these disclosure omissions in the course of our research into the flow of capital from Mexico to the United States. We expect all entities to fully disclose mandatory information to the SEC to protect our financial system,” writes National Strategic Retail Department Director Jeffrey Fiedler in the letter to US securities industry regulators.
The Romo Garza family has apparently rotated Plenus’ ownership among relatives for some reason, which we cannot discern. According to the most recent publicly available records, Consuelo Lourdes Garza Laguera owned 99% of Plenus in April 2016. Alfonso Romo Garza’s father owned 99% in 2006 and Alfonso Romo Garza’s brother Gustavo Adolfo Romo Garza held 99% in 2002 according to earlier public records.
“The Chief of Staff to the President of Mexico is a powerful position in its own right,” Fiedler points out. “Romo Garza is arguably the most important liaison between the Mexican Presidency and the Mexican business community.”
A copy of the letter in English can be found below. Public records documenting the facts outlined above are also included.
Alfonso Romo Garza served on the board of directors of Grupo Comercial Chedraui from 2002 to 2005. ChedrauiLeaks is not stating that any members of the Chedraui family or their companies have any involvement in the ownership of Vector Casa de Bolsa.
About ChedrauiLeaks
ChedrauiLeaks.org is a project of the United Food and Commercial Workers, to investigate the connections between the Chedraui family and other Mexican elites as well as their links to business and property in the United States, the business and political activities of Mexican elites generally, and provide information about the struggle of El Super workers for a better life.
March 25, 2020
Ms. Stephanie Avakian, Co-Director
Mr. Steven Peiken, Co-Director
Division of Enforcement
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Dear Ms. Avakian and Mr. Peiken:
We call on you to conduct an investigation into registered investment adviser VectorGlobal IAG Inc.’s (“IAG”) apparent failure to disclose on its most recent Form ADV that Consuelo Lourdes Garza Laguera de Romo (the wife of Alfonso Romo Garza, who is Chief of Staff for the President of Mexico) indirectly owned more than 25% of IAG.
We believe that Consuelo Lourdes Garza Laguera de Romo indirectly owns more than 25% of IAG because an affiliate of IAG under identical common ownership lists her as a greater than 25% owner in its current FINRA disclosure (current as of the date of this letter). Specifically, both IAG and registered broker-dealer VectorGlobal WMG Inc. (“WMG”) are wholly-owned indirect subsidiaries of Mexican brokerage Vector Casa de Bolsa. WMG reported on its current FINRA broker disclosure report that Consuelo Lourdes Garza Laguera de Romo was a control person and indirectly owned more than 25% of WMG beginning August 2019 via Vector Casa de Bolsa. Both the FINRA broker disclosure report and SEC Form ADV require entities to disclose greater than 25% indirect owners. Despite this same disclosure requirement, IAG did not make any disclosure on its March 12, 2020 Form ADV about Consuelo Lourdes Garza Laguera being a control person and indirectly owning more than 25% of IAG.
Additionally, Vector Casa de Bolsa reported in Mexican stock exchange filings that Plenus SA de CV owned more than 25% of Vector Casa de Bolsa for a minimum period of July 2017 through August 2018. Despite this, IAG did not disclose that Plenus indirectly owned more than 25% of IAG through Vector Casa de Bolsa on three separate occasions during this 2017 to 2018 period. The SEC should also investigate IAG’s historical lack of disclosure that Plenus had indirectly owned more than 25% of IAG via Vector Casa de Bolsa.
We believe, based on publicly available records, the time period that Plenus owned more than 25% of Vector Casa de Bolsa was likely much longer and likely overlapped with Garza Laguera owning Plenus. Garza Laguera owned 99% of Plenus in April 2016, based on the last publicly available ownership information we could find. The Romo Garza family has apparently rotated Plenus’ ownership among relatives for some reason, which we cannot discern.
Our investigation request is based on the following public records attached to this letter and discussed in detail below.
VectorGlobal IAG did not disclose control person and 25% indirect owner Consuelo Lourdes Laguera de Romo in its March 12, 2020 Form ADV.
VectorGlobal IAG filed its amended Form ADV with the SEC on March 12, 2020. Both IAG and WMG are wholly owned by Vectormex International Inc., which is in turn wholly owned by Vector Casa de Bolsa. No indirect owners through Vector Casa de Bolsa were shown on IAG’s Form ADV. This conflicts with the current FINRA BrokerCheck disclosure for WMG, which discloses Consuelo Lourdes Garza Laguera de Romo as a 25% owner and control person since August 2019 through Vector Casa de Bolsa. Both Form ADV and Form BD, which underpins BrokerCheck, require filers to disclose greater than 25% indirect owners, based on the same definitions.[1] Moreover, we believe that Garza Laguera currently remains an indirect owner of more than 25% of WMG, and thus IAG, because FINRA requires registered broker-dealers to “promptly” disclose changes whenever any information on file becomes inaccurate. WMG has evidently not changed Garza Laguera’s status as of the date of this letter.
Additionally, VectorGlobal IAG did not disclose that Plenus SA de CV indirectly owned more than 25% of IAG for a minimum period of July 2017 through August 2018.
An undated investor questionnaire for a Mexico-listed investment fund (“VMZCK”) sponsored by Vector Casa de Bolsa and its affiliates Vector Empresas (which we will discuss further) and Vector Partners disclosed that the 27% owner of Vector Casa de Bolsa was Plenus SA de CV (see below). Plenus was also a 27% owner of VMZCK sponsor Vector Empresas. PDF metadata for the questionnaire, which was filed with the Mexico stock exchange, has a “CreateDate” of July 7, 2017 and shows no evidence that it was edited thereafter (the “ModifyDate” is also July 7, 2017). The filing date for the disclosure is not provided by the current Mexico stock exchange disclosure system.
The investment fund VMZCK issued its shares in December 2017. The Definitive Prospectus for VMZCK filed with the stock exchange on December 21, 2017 stated that Vector Empresas and Vector Casa de Bolsa were “Affiliates” defined as any two entities where the first “directly or indirectly controls, is controlled by, or is under common control with” the second entity.
A subsequent VMZCK investor presentation included a diagram showing that Vector Empresas and Vector Casa de Bolsa shared the same 99.99% shareholders. The solid lines on the diagram showed the ownership structure that was current as of the slideshow. (Dotted lines showed a contemplated future structure, which we have not seen evidence of having come into existence.) The slideshow was labeled “August 2018” and its PDF metadata shows its “CreateDate” was August 28, 2018. No filing date for the presentation is provided by the current Mexico stock exchange disclosure system. Through April 2019, Plenus remained a 27% owner of Vector Empresas according to the fiscal year 2018 annual report for VMZCK.
VectorGlobal IAG filed Form ADV amendments three times during the time period described above, on July 28, 2017, January 31, 2018 and August 13, 2018. None of these three VectorGlobal IAG Form ADV amendments reported any indirect owners holding more than 25% of IAG through Vector Casa de Bolsa, despite the 27% stake held by Plenus SA de CV.[2]
The full time period in which Plenus was a 27% indirect owner of IAG through Vector Casa de Bolsa also merits investigation. Some records suggest the period was longer, but we have been unable to find public records for Vector Casa de Bolsa that establish Plenus as a 27% owner beyond what we outlined above (July 2017 through August 2018).
However, Plenus’ continued ownership of Vector Casa de Bolsa’s affiliate Vector Empresas suggests that Plenus has owned Vector Casa de Bolsa for longer than 2017 to 2018. The most recent publicly available percentage ownership for Vector Empresas is April 2019 and the earliest is its September 2012 formation record — Plenus was a 27% owner of Vector Empresas at both times.
As of March 18, 2020, the website for a Vector Empresas subsidiary states the shareholders of Vector Empresas “are owners of Vector Casa de Bolsa.” However, the website does not specify whether the common shareholders of Vector Empresas and Vector Casa have continued to hold the same proportional percentage ownership in each company.
In April 2019, the annual report for investment fund VMZCK showed Plenus was 27% owner of Vector Empresas (the fund’s “fideicomitente”), noting that the information was current through the release of the report:
Earlier, Plenus owned 27% of Vector Empresas at its founding in September 2002. (Vector Empresas was founded under the name “Vector G.F.”.) The founding shareholder table for Vector Empresas in 2002 was largely the same as the April 2019 shareholder table reported by the investment fund VMZCK:
Alfonso Romo Garza was Executive Chairman of Plenus from 2002 to November 2018. His wife Consuelo Lourdes Garza Laguera de Romo was the most recent disclosed majority shareholder of Plenus (99.998% owner, April 2016).
Alfonso Romo Garza’s most recent publicly available public servant financial disclosure stated he was Executive Chairman of Plenus SA de CV from August 2002 to November 2018. Romo Garza has served as Chief of Staff to the President of Mexico since inauguration day, December 1, 2018. He was the chief economic advisor to Andres Manuel Lopez Obrador beginning around January 2017: Reuters quoted Romo Garza in July 2018 saying “This was my job from January of last year.”[3]
We’ve been unable to find shareholder information for Plenus for any time after April 2016, when the International Finance Corporation disclosed Consuelo Lourdes Garza Laguera de Romo was 99.998% owner of Plenus (using her birth name Consuelo Lourdes Garza Laguera Rangel). The only other Plenus shareholder information available from the Mexico corporate registry shows that Garza Laguera held 99.996% on November 24, 2011; Alfonso Romo Garza’s father owned 99.996% on June 30, 2006, and Alfonso Romo Garza’s brother Gustavo Adolfo Romo Garza held 99.998% on August 1, 2002.
Based on these corporate registry records, the Romo Garza family has apparently rotated ownership among relatives for some reason which we cannot discern.
We discovered these disclosure omissions in the course of our research into the flow of capital from Mexico to the United States. We expect all entities to fully disclose mandatory information to the SEC to protect our financial system. The Chief of Staff to the President of Mexico is a powerful position in its own right, and Alfonso Romo Garza was named in January to run a domestic development taskforce coordinating the Mexican ministries for the treasury, economy, communications and transportation, environment and natural resources, and energy. Romo Garza is arguably the most important liaison between the Mexican Presidency and the Mexican business community considering his official roles, his background as a business leader, and his support for the Mexican President dating back to Lopez Obrador’s unsuccessful 2012 campaign. Attached to this letter are public records documenting the facts outlined above.
Sincerely,
Jeffrey Fiedler
Director, National Strategic Retail Department
United Food and Commercial Workers International Union
Cc: Hon. Martha Bárcena, Ambassador of Mexico to the United States
[1] Indirect owner instructions: Form ADV – https://www.iard.com/adv_scheduleb
Form BD – page 11, https://www.sec.gov/about/forms/formbd.pdf
[2] Available at: https://www.sec.gov/foia/docs/form-adv-archive-data.htm – “Historical ADV filing data for SEC registered investment advisers from January 2001 through the most recent quarter and for SEC exempt reporting advisers from December 2011 through the most recent quarter, is available in .csv format, below. These files contain ADV Part 1A, all Schedules, and DRPs.”
[3] Julia Love. “Olympic equestrian tycoon saddles up to join Mexican leftist’s cabinet”. Reuters. July 9, 2018.
Documents:
- VectorGlobal IAG – Form ADV – March 12, 2020
- VectorGlobal WMG – Brokercheck – March 25, 2020
- Questionnaire – July 2017 for VMZCK
- Presentation – August 28 for VMZCK
- VMZCK Definitive Prospectus
- Vector Empresas formation (founded as Vector G.F.)
- Alfonso Romo Garza – Initial declaration
- Alfonso Romo Garza – Amended declaración
- Plenus SA de CV formation 2002 (founded as Desarrollo Consolidado De Negocios SA de CV)
- Plenus SA de CV assembly 2006
- Plenus SA de CV assembly 2011
- Plenus SA de CV – April 2016 website excerpt captured March 25, 2020 from https://disclosures.ifc.org/#/projectDetail/SII/38101