SEC penalizes 6 brokers

The Securities and Exchange Commission has penalized six local stock brokerage houses for their failure to comply with certain requirements in the 2015 implementing rules and regulations of the Securities Regulation Code (SRC), some provisions of which are under court dispute.

In a statement, the SEC said it had started penalizing non-compliant brokers. It has far sanctioned Equitiworld Securities Inc., First Orient Securities Inc., IGC Securities Inc., Regina Capital Development Corp/, SJ Roxas & Co. Inc., and The First Resources Management and Securities Corp.

These brokerage houses support a court case filed by Philippine Association of Stock Brokers and Dealers Inc. against the SEC that questioned 42 provisions in the 280-page implementing rules.

The penalties imposed on the brokers ranged from P30,000 to P60,000.  The SEC said “heavier sanctions maybe imposed if they continue to violate the regulatory requirements.”

“I guess the SEC has a way of persecuting people who fight its no-due-process action,” said Vivian Yuchengco, president of First Resources.

“We, the majority, have the same stand with PASBDI,” said Trina Kalaw, chair of First Orient which was among the brokers penalized by the SEC.

“We are aligning with PASBDI just to show solidarity in how we respond,” Regina Capital managing director Gerrardo Limlingan said.

PASBDI said certain provisions of the IRR were contrary to the Constitution as it denied them due process and even impaired the obligation of contracts. The group said the amendments were contrary to the law. It said the SEC had neither explained the amendments nor showed that existing rules were no longer workable.

The case against the SRC is pending at the Regional Trial Court of Mandaluyong City.

Letters from the SEC stated that the brokers failed to submit the requirements prescribed under the 2015 SRC guidelines, such as risk management and internal control procedures, business continuity and disaster recovery plan, comprehensive information technology plan, updated written supervision and control procedures, and copies of proposed contract of outsourced activities or services.

The SEC insists that the new requirements—which took effect on Nov. 9, 2015—were intended to improve market structures, enhance investor protection and strengthen the anti-money laundering framework.