SEC probes DW Capital for unauthorized trades

MANILA, Philippines -  The Securities and Exchange Commission (SEC)  is looking into the case of DW Capital Inc. to determine if the Capital Markets Integrity Corp. (CMIC) can take over the brokerage company which was found to have engaged in unauthorized trading of securities.

CMIC is the self-regulatory organization and the primary regulator of the trading participants of PSE.

Last Aug. 10, the Philippine Stock Exchange issued a memorandum implementing a preventive suspension on DWCI for engaging in unauthorized trading of securities  involving five accounts with a total market value of P2.6 billion.

On Aug. 7, DWCI clients, through their lawyers, requested CMIC to prohibit the brokerage firm from trading the shares of stock of their clients and to direct DWCI to preserve the records of transactions pertaining to subject securities.

On Aug. 9, the clients demanded the immediate delivery of their shares of stocks.

CMIC has informed the SEC of the suspension and filed a petition with the corporate regulator to takeover the operations of DWCI.

In response, the SEC instructed its Market Securities Regulation Department to conduct an investigation and verification of the allegations contained in the petition.

Thus, on Aug. 18, MSRD issued a subpoena duces tecum, directing DWCI to  submit to the SEC various records that would establish the financial condition of the broker firm.

These records include the customer master list, stock position report per customer, portfolio reports, transaction reports, account ledgers, statement of accounts, confirmation invoices and customer account information forms.

DWCI moved to partially quash the subpoena and requested for additional time to comply with the submission of documents.

The MSRD has set the case for clarificatory hearing on Aug. 29.

According to Rule 33.1 of the Securities Regulation Code, the SEC, after proper investigation or verification or upon verified complaint by any party, may order an exchange or pertinent SRO to take over the operation of a failed trading participant for the purpose of preserving and protecting the latter’s books, records, customer accounts, trade-related assets and settling its liabilities to its customers.