Chile Supreme Court Overturns CMF’s Closure of Sartor Fund Manager Over Due Process Violation

Supreme Court Strikes Down CMF’s Revocation of Sartor AGF

Chile’s Supreme Court has declared illegal the Comisión para el Mercado Financiero’s (CMF) revocation of the existence of Sartor Administradora General de Fondos, the fund manager at the centre of the sprawling Sartor case. In a unanimous ruling, the court found that the CMF acted without conducting the formal sanction proceeding required by law, thus violating fundamental guarantees of administrative due process.

The court voided Resolution Exenta N°12.118 from December 2024, which had revoked Sartor AGF’s authorisation and appointed a liquidator. The decision effectively restores the legal existence of the asset manager, though the court made clear that the CMF may still pursue future action through proper channels.

The ruling came just as a massive criminal investigation into the Sartor case was advancing in parallel. Lawyers for Sartor stressed that the outcome reaffirms limits on regulatory arbitrariness and sets a significant precedent for the financial sector.

What the Ruling Means for Sartor, the Regulator, and Fund Investors

A Reprieve for Sartor, but the Shadow of Sanctions Remains

The court’s decision lifts the immediate threat of liquidation, but the company remains under investigation. The CMF can now restart a sanction procedure if it follows the correct steps, meaning Sartor’s operational freedom is provisional. For the group’s leadership, the ruling offers time to restructure and defend against other legal challenges, but it does not clear past misconduct allegations.

CMF’s Credibility and Procedural Constraints

The verdict delivers a blow to the CMF’s enforcement approach, exposing a misstep that could weaken its authority in future proceedings. The strict requirement for due process in revoking licences will likely force the regulator to be more methodical, potentially slowing its response to crises. However, the ruling also reinforces the need for robust procedural safeguards, which could enhance long-term trust in regulatory processes.

Investors Left in Limbo

Thousands of fund contributors suffered losses when Sartor AGF was shut down. While the reinstatement of the administrator raises hopes of recovering some value, the funds themselves remain distressed and the criminal proceedings add to the uncertainty. The court’s decision does not automatically reverse losses or guarantee compensation, leaving investors in a wait-and-see position.

Next Steps for Sartor and the CMF

For Sartor management:

• Urgently assess the operational status of the administrator now that the liquidation order is voided and resume fund administration within legal confines.
• Prepare for a possible new sanction proceeding from the CMF, which may now follow the correct administrative path.
• Evaluate legal strategies to seek redress for damages caused by the original revocation—the company’s lawyers have indicated they will analyse the ruling’s scope for further action.

For the CMF:

• If it wishes to sanction Sartor AGF again, it must launch a formal administrative proceeding as defined by Law N°21.000, providing full due process.
• Review internal procedures to ensure similar enforcement actions do not repeat the same procedural flaws, given the reputational cost of the Supreme Court’s ruling.

For fund investors:

• Monitor whether the reinstated administrator can stabilise the funds. No immediate compensation path exists, but the legal victory could open avenues for recovery claims in later proceedings.