As self-styled investment gurus pitch “meme” stocks and attempt to influence a growing army of cash-awash yield-seeking retail investors, Philippine financial regulators like the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP) see the need for regulatory oversight on investment advisory.
This is according to SEC Commissioner Ephyro Luis Amatong, who said on Friday in a forum organized by the Financial Executives Institute of the Philippines (Finex) that the SEC was looking at more ways on how to improve investor protection.
One example of a meme stock, so-called for their flash-in-the-pan popularity on social media, is GameStop in the United States. The GameStop drama has awed the world as the firm’s stock price rose to historic highs after a critical mass of retail investors congregating via online forum Reddit countered the short-selling trades of hedge funds.
“The Philippines does not have a formal law regulating investment advisory so there are a lot of people who represent themselves to be investment advisors or investment gurus. Currently, in the Philippines, that’s totally unlicensed,” Amatong said.
“It’s a strange artifact of history that we never adopted the US Investment Advisory Act even though most of our neighbors have the same. That’s something that we are looking at,” he added.
Amatong said the SEC, together with the BSP, the Insurance Commission and the Philippine Deposit Insurance Corp., was also supporting the Financial Consumer Protection bill in Congress. Introduced by Rep. Junie Cua of Quirino, the bill spells out the duties and responsibilities of financial service providers and mandates transparency, disclosure and responsible pricing.
“At the end of the day, you are your own best defense against these [gurus]. Do you really want to put life savings or the tuition of your children in the management hands of a nonprofessional or the advice of, just to cite a Philippine example, a football superstar or a movie superstar? Are they qualified to guide you?” he said. INQ