SEC investigating brokerage firm for ‘unauthorized’ trading of P2.6-B stocks
The Securities and Exchange Commission (SEC) is reviewing a petition from the Capital Markets Integrity Corp. (CMIC) to take over the operations of stock brokerage DW Capital Inc., which was suspended earlier this month due to alleged unauthorized trading of stocks worth around P2.6 billion.
CMIC, a self-regulatory organization and the primary regulator of the trading participants of the Philippine Stock Exchange (PSE), initiated the petition before the SEC on Aug. 8.
Under the Securities Regulation Code, the SEC may order an exchange or a self-regulatory organization to take over the operation of a failed trading participant after proper investigation or verification. This is for the purpose of preserving and protecting a participant’s books, records, customer accounts, trade-related assets and for settling its liabilities.
Based on a briefer issued by the SEC on Friday, the CMIC alleged DW Capital, represented by Derwin Wong and Connie Lozada, had engaged in unauthorized trading of stocks involving five accounts with market value of “short” or sell positions amounting to around P2.6 billion as of July 28, 2017.
Represented by their lawyers, the clients of DW Capital last August 7 requested CMIC to prohibit the firm from trading their shares of stock and to preserve their records of transactions. The clients finally demanded on August 9 the immediate delivery of their securities under the care of the brokerage firm.
The PSE issued a preventive suspension order on DW Capital on August 10. The CMIC likewise followed with a similar order as well as a special audit against the firm.
In view of the developments, the SEC instructed on August 18 its markets and securities regulation department (MSRD) to conduct an investigation into the allegations contained in CMIC’s petition.
DW Capital already requested for additional time to comply with the submission of documents and proof of its financial condition. MSRD has set the case for clarificatory hearing on August 29.
