Bourse warns public against illegal fund solicitation

/ 05:28 AM January 04, 2019

The Philippine Stock Exchange has warned the investing public against entities soliciting funds or investments bereft of any credential and bearing only an intention to set up a securities brokerage firm under the local bourse.

“Please note that there is no guarantee that such entities will be a PSE trading participant as they will be required to undergo a comprehensive assessment by the Exchange based on their suitability and qualifications under applicable laws and regulations,” PSE president Ramon Monzon said in an advisory dated Jan. 2.


The PSE issued the advisory upon receiving information that certain entities were soliciting investments while representing that they intended to set up a securities brokerage firm under the PSE.

If such entities were selling securities or offering them for sale without prior registration with the Securities and Exchange Commission (SEC), Monzon said this would also be a violation of the Securities Regulation Code and be a ground for disqualification of a person or corporation acquiring a trading right and persons applying as a nominee of a trading participant.

The public was advised to exercise caution and undertake due diligence with respect to any solicitation of funds or investments by entities intending to be a PSE trading participant or a securities broker/dealer.

Failure to obtain prior registration with the SEC when soliciting funds or investments would subject the seller or offeror to civil and criminal penalties under the law, Monzon said.

“In this regard, the Exchange wishes to remind the public that PSE trading participants are required by laws and regulation to have a valid broker or dealer license granted by the SEC,” he said.

As a mandatory requirement, Monzon said any entity applying to be a PSE trading participant must have a trading right, only under which such trading participant could access and use the trading facilities of the local bourse.

Monzon also cited the existing rules that provided the following minimum qualifications for an entity applying to be a PSE trading participant:

• It must be a duly registered domestic corporation authorized to transact as a broker or dealer in securities;

• It must be composed of stockholders not exceeding such number as may be prescribed by law or regulations and who are all acceptable to the PSE board.


• It must have a minimum unimpaired paid-up capital of P100 million.

“Given that the foregoing are minimum qualifications, the Exchange retains the right to assess the overall fitness and integrity of the applicant, which includes, among others, assessing the track record and qualifications of its shareholders, management, nominee and other officers,” Monzon said.

Monzon added that the rights, benefits and obligations of any trading participant could not be transferred, assigned, sold, acquired or exercised by any person or corporation without prior approval of the PSE board.

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