Brokers group protests SEC move

/ 03:18 AM August 20, 2016

The Philippine Association of Securities Brokers & Dealers Inc. (Pasbdi) has cried foul over the penalties slapped by the Securities and Exchange Commission on stock brokers for noncompliance with the implementing framework of the Securities Regulation Code.

In a five-page letter dated Aug.3 sent by Pasbdi’s legal counsel Feria Tantoco Daos Law Offices, the SEC’s markets and securities regulation department (MSRD) was urged to cease from taking any action deemed “intended to preempt the outcome of the petition filed with RTC (Regional Trial Court) Mandaluyong and render moot PASBI’s prayer for a writ of injunction.”


The group has challenged in court 42 provisions of the 280-page SRC implementing rules and regulations (IRR) issued by the SEC late last year, arguing that the additional requirements were contrary to the Constitution and the Data Privacy Act of 2012.

The letter was addressed to MSRD director Vicente Graciano Felizmento Jr. following a show-cause order issued to IGC Securities for the supposed violation of the provision of the implementing rules pertaining to compliance with new requirements.  IGC Securities—which is owned by veteran stock broker Ismael Cruz who is also president of Pasbdi—was directed to pay a fine of P60,000.


The legal counsel said IGC Securities had explained in a June 2 letter to MRSD that the plans and manuals required to be submitted under the rules were “complex and technical and should be specifically applicable only to the securities industry.”  It also noted that IGC Securities was expecting the SEC to issue templates of the plans or manuals similar to what was done with respect to the operating manual for Anti-Money Laundering rules in 2014 and 2010.

But the legal counsel said it was unfortunate that the MRSD had “brushed aside IGC’s concerns with nary an explanation and instead proceeded to impose sanctions without any justification.”

“Your haste in penalizing IGC betrays our mindset,” the legal counsel said.

Pasbdi’s legal counsel said the contested requirements were “unreasonable, too burdensome, and not to mention costly and prohibitive as compliance therewith would necessitate the hiring of additional personnel.”

The legal counsel also questioned MRSD’s authority to impose the penalties on the brokers.  The law firm noted that under section 54 of the SRC, the power to impose sanctions and penalties belongs exclusively to the SEC and not the markets and securities regulation department.

As the administration of SRC belongs to SEC as a collegial body, the law firm said MSRD had “no authority to investigate, much less impose sanctions for alleged violations of the SRC and IRR.”

“Obviously, you have arrogated unto yourself a power that properly belongs to the Commission, a clear act of abuse of power for which you may be held liable,” the legal counsel said, adding that was tantamount to “usurping the exclusive function of the Commission.”


The legal counsel urged the MRSD to respect the legal process “while the subject matter remains in contest.”

Apart from IGC, likewise penalized for noncompliance to the IRR were: Equitiworld Securities Inc., First Orient Securities Inc., Regina Capital Development Corp/, SJ Roxas & Co. Inc., and The First Resources Management and Securities Corp.   All these brokerage houses supported the pending court case filed by Pasbdi against the SEC.

For its part, 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. These are based on global best practices and standards as being done in leading markets.

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TAGS: brokers, Business, economy, News, PASBDI, Philippine Association of Securities Brokers & Dealers Inc., Protest, SEC, Securities and Exchange Commission
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