Fallout from R&L rogue trades may hit P2.6B

By: - Reporter / @daxinq
/ 05:26 AM November 08, 2019

Stock market authorities were investigating additional equity transactions on the bourse in recent weeks that might be linked to the rogue employee who stole and wiped out over P700 million in clients’ shares lodged with the stock brokerage, R&L Investments Inc.

The Inquirer learned that several brokerage firms who might have dealt with the 50-year-old stock brokerage — which voluntarily suspended trading activities on Monday to stanch its financial bleeding — were now poring over their books to determine if they, too, were affected by the fraudulent transactions.


More importantly, bourse auditors now believe that the amount of questionable trades that may be linked to the activities of R&L Investments’ settlements clerk, Marlo Moron, may be as high as P2.6 billion.

“Of this amount, around P700 million plus came from the stock inventory of R&L,” said one official familiar with the matter, speaking on condition of anonymity because the investigation was still ongoing. “So there’s around P1.9 billion [worth of stock transactions] that we can’t trace yet.”


“We’re still trying to understand where those trades came from, and where they went,” another official added, explaining that stock brokers who have had recent dealings with R&L Investments have already been notified to review their records and submit reports to the Philippine Stock Exchange.

R&L Investments — one of the oldest stock brokerage firms in the country — ceased operations on Monday after its owners uncovered a long-running scam by a “trusted employee” that resulted in almost the entire investors of clients’ shares held by the firm being wiped out.

The company said it saw “over P700 million worth of its inventory of stocks” stolen by its settlement clerk, who was apprehended by police operatives and had since confessed to the crime, according to various market sources.

The Inquirer obtained a copy of the letter of R&L Investments’ owner Lucy Linda Lee to PSE director Alejandro Yu narrating the details of the theft by the firm’s employee, Marlo Moron, who allegedly began dipping his hands into the firm’s stock inventory in small amounts in 2011 — with the amounts gradually increasing as he was emboldened over the years.

“Almost all our stock position had been depleted,” Lee said in her report to the PSE where she also disclosed that the firm had decided to stop trading operations this week to mitigate the damage. At the end of 2018, R&L Investments held P765 million worth of stocks on behalf of its clients, according to its audited financial statements.

Sought for comment on the issue, PSE president Ramon Monzon stressed the need to push ahead with long planned reforms in the bourse to help prevent a recurrence of this kind of internal fraud.

“This clearly supports our position that [the securities] depository should be under control of PSE for risk management reasons,” he said in a text message from Jakarta where he was attending a conference. “We are the only exchange that does not manage or control the depository for equities. That’s why we were buying [the Philippine Dealing System].”


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TAGS: R&L Investments Inc., rogue employee, stock brokerage, Stock Market
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