MANILA, Philippines—The Philippine Stock Exchange has slapped a P5-million penalty on RCBC Securities Inc., citing “violations” of provisions under the Securities Regulation Code and stock market rules in relation to the activities of blacklisted agent Mary Grace “MG” Valbuena.
In a press statement, the PSE said the monetary penalty was due to RCBC Securities’ failure to do the following:
• Supervise registered salesperson Valbuena and to implement effective internal control procedures to prevent the unauthorized use and disposition of funds and securities entrusted by clients;
• Apply the “suitability” rule in relation to SRC Rule 30.2-3(E) on discretionary accounts being handled by Valbuena;
• Implement SRC Rule 34.1-2 on segregation of functions (also known as the rule of Chinese Wall) which allowed Valbuena to gain access to documents which were found to be manipulated and reproduced by her allegedly to defraud clients; and
• Ensure Valbuena’s compliance with Article IV of the amended market regulation department (MRD) rules or the “Code of Conduct and Professional Ethics for Traders and Salesmen.”
“This is a clear demonstration of the PSE’s role in enforcing good corporate governance. We would like to assure the public that the PSE will not tolerate such activities by erring personnel of trading participants,” PSE President and Chief Executive Officer Hans Sicat said.
The PSE also required RSI to put in additional paid-up capital to cover clients’ claims relevant to the alleged violations. RSI has in turn, put up additional capital of P300 million for this purpose. Total claims have amounted to P126 million to date, the PSE said.
The PSE also ordered the stock brokerage to amend its internal control procedures to prevent similar types of unauthorized transactions from occurring and submit the same to the MRD. The brokerage house was also asked to submit a complete report of its findings on all unauthorized activities of Valbuena and any related officers and employees within five days from the completion of its investigation due to a number of violations of the SRC.
Valbuena was permanently barred by the PSE from entering its facilities and systems due to willfully causing the unauthorized use or disposition of funds or securities entrusted to her by clients of RCBC Securities.
The PSE also recommended to the Securities and Exchange Commission the suspension of the SEC license of Rhodora A. Alberto, the associated person of RCBC Securities, for failure to supervise the activities of Valbuena and to oversee RSI’s compliance with the SRC Rules.
As of December 23, 2011, Valbuena was no longer connected with RCBC Securities.