Venture Securities loses license, fined P32M in R&L mess
Local brokerage house Venture Securities Inc. (VSI) was stripped of its broker-dealer license and slapped with penalties totaling P32 million by a special hearing panel (SHP) of the Securities and Exchange Commission (SEC) for its role in the P700-million stock fraud that led to the collapse of 55-year-old stock brokerage R&L Investments.
In its decision dated June 11, the panel cited acts and omissions on the part of VSI and its officers that “indispensably contributed to, if they had not been the proximate cause of, the losses incurred by the clients of R&L.”
The case revolved around the unauthorized transfers of roughly P10 billion worth of transactions through EQ trades, or the transfer of equity securities or shares from one broker to another, from R&L to an account of a certain “Julieto Sulapas’” in VSI from 2012 to 2019.
In November 2019, the SEC had ordered the Capital Markets Integrity Corp. (CMIC) to take over the operations of R&L following the discovery of such unauthorized transfers of shares. On the part of R&L, the transactions had been facilitated by rogue settlement clerk Marlo Moron.
The P32-million fine includes those imposed against four key officers, namely VSI president Wilfred Racadio, associated person Adora Aguilar, salesman Loreto Balabis and settlement head Teresita Mosenabre. The SHP concluded that these officers had failed to observe know-your-client procedures and other controls mandated by the Securities Regulation Code (SRC) and its implementing rules and regulations.
The panel also disqualified Racadio, Aguilar, Balabis and Mosenabre from being registered broker-dealer representatives. Except for Racadio, the other three were also disqualified from being officers, directors or persons performing similar functions.
The SHP noted the officers of VSI were not present when Sulapas supposedly opened an account and that they failed to verify the authority of Moron to transact on behalf of Sulapas.
Separate investigations conducted by CMIC and the SEC Markets and Securities Regulation Department (MSRD) revealed Sulapas’ transactions under his VSI account amounting to P9.9 billion were “grossly disproportionate” to his declared net worth.
Sulapas’ account ledger with VSI further showed he made about 2,800 “buy” transactions from 2012 to 2019, even though he only made five cash payments during the same period.
The panel also said VSI and its officers failed to report suspicious transactions to the Anti-Money Laundering Council and somehow even helped Sulapas evade the reporting threshold by issuing multiple checks for amounts lower than P500,000.
VSI was found by SHP to be in violation of multiple provisions of the SRC and its implementing rules such as the ethical standards rules, rule of capabilities, rule on information about clients, prohibitions on extension of margin credit, rule on purchases and sales in cash account, the books and records rule, and the customer account information rule. INQ
