SEC to monitor probe into shutdown of 50-year-old stock brokerage

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Metro Manila (CNN Philippines, November 8) — The country’s corporate regulator on Friday said it will “closely monitor” the investigation on the closure of one of the oldest stock brokerage firms in the Philippines.

A report by Philippine Daily Inquirer on Thursday said 50-year-old R&L Investments Inc. stopped its operations “earlier this week” after stocks worth more than ₱700 million allegedly were stolen by one of its employees.

In a statement, the Securities and Exchange Commission (SEC) said it expects Capital Markets Integrity Corporation (CMIC) to thoroughly look into the issue to “identify all parties involved, and uncover the extent of the damage to the stock brokerage, its clients and the overall market.”

CMIC is the independent audit, surveillance, and compliance arm of the Philippine Stock Exchange.

“The investigation should also provide clarity as to how such transactions could have slipped past multiple control measures. For one, the 2015 SRC Rules requires broker dealers to conduct monthly security examination, count and verification to account for discrepancies,” SEC said.

The regulator also said it expects the release of the Name on Central Depository (NoCD) facility of the Philippine Depository & Trust Corp. (PDTC) by the first quarter of 2020 in hopes of preventing similar incident in the future.

NoCD facility allows for the recording of securities at PDTC in the name of individual investors.

Most securities, SEC said, are currently recorded in “omnibus accounts” that aggregate the holdings of all investors.

“The creation of sub-accounts under the NoCD arrangement will increase transparency in the trading of securities. It will also give investors a means to monitor movements in their accounts through SMS or email notifications,” the regulator sid.

SEC said it is also in discussion with PDTC for the creation of a mechanism that will allow the latter to provide monthly reports on a stock brokerage’s position directly to the board of directors.