SEC says closely monitoring investigation into P700-million stock theft

MANILA, Philippines — The Securities and Exchange Commission said Friday it is monitoring the ongoing probe into reports that an employee of R&L investments Inc. allegedly stole more than P700 million worth of stocks that forced the brokerage firm to cease operations.

The SEC said the Capital Markets Integrity Corporation — the independent audit, surveillance and compliance arm of the Philippine Stock Exchange — is investigating the reported theft that nearly wiped out the position of R&L Investments.

“The SEC expects CMIC to conduct a thorough investigation to unearth the truth behind the transactions in question, identify all parties involved, and uncover the extent of the damage to the stock brokerage, its clients and the overall market,” corporate regulators said in a statement.

“The investigation should also provide clarity as to how such transactions could have slipped past multiple control measures,” it added.

Among the CMIC’s powers and functions is to investigate and resolve violations by trading participants of the securities law, as well as trading-related irregularities and unusual trading activities involving issuers.

According to the SEC, it expects the full rollout of the Name on Central Depository (NoCD) facility of the Philippine Depository & Trust Corp. (PDTC) by the first quarter of 2020 to “reinforce the controls and deter similar incidents from occurring in the future.”

The NoCD facility allows for the recording of securities at PDTC in the name of individual investors. At present, most securities are recorded in “omnibus accounts” that aggregate the holdings of all investors, the SEC explained.

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