SEC opens probe on DW Capital trade deals

The Securities and Exchange Commission (SEC) has formally started investigating a claim that stock brokerage house DW Capital Inc. sold as much as P2.6 billion of its clients’ shares without their knowledge.

The SEC said in a statement late Monday that a special hearing panel was established last Aug. 31, 2017 — almost a month since the issue first caught the public’s attention via the suspension of DW Capital.

The panel was formed to look into the complaint of Valerie Gaisano-Sebastian, daughter of shopping mall magnate Edmund “Eddie” Gaisano Sr, both of whom were tagged as victims in the alleged scheme. The SEC said her complaint was received on Aug. 30.

DW Capital was already suspended on Aug. 10, 2017 by the Capital Markets Integrity Corp., an independent regulatory body of the Philippine Stock Exchange.

Gaisano-Sebastian claimed DW Capital had committed “unauthorized, fraudulent and deceitful acts… by allegedly selling complainant’s shares of stocks without her knowledge and consent.”

According to the SEC, DW Capital have submitted documents sought by the SEC’s Markets and Securities Regulation Department last Aug. 18.

The SEC noted in its statement Monday that DW Capital “asserted that the Gaisano family’s trades were all authorized.”

The Gaisanos, based in Cebu, were allegedly victims of trades orchestrated by Mr. Gaisano’s son-in-law Derwin Wong, described as the former president of DW Capital. It was not immediately clear if there were other victims or perpetrators.

Wong is married to another one of Gaisano’s daughters, Eda. The SEC said in its statement that Eda and Derwin Wong have been married since 2007 “although the couple has been living apart since late July 2017.” Eda Gaisano-Wong is also a client of DW Capital, the SEC said.

There were no details on the whereabouts of Wong. Company officials and Gaisano family members could not be immediately reached for comment.

The CMIC, as the PSE’s own broker watchdog, earlier filed a petition with the SEC to take over DW Capital. It also launched an audit into the company’s operations.

“The petition for takeover is still pending with the SEC and the determination of financial deterioration of [DW Capital] is still ongoing,” the SEC said in its statement on Monday.

While suspended, DW Capital cannot directly or indirectly trade on the PSE.

According to the SEC, the special hearing panel was needed given the extent of the transactions involved and allegations of fraud committed by trading participant.

“There are also claims and counterclaims by [DW Capital] and its clients the Gaisanos,” the SEC said.

It added that the special panel was comprised of lawyers from the SEC’s Enforcement & Investor Protection Department, Office of the General Counsel, and Markets & Securities Regulation Department.” CBB