SEC revokes license of R&L Investments

Iris Gonzales (The Philippine Star) - June 17, 2021 - 12:00am

MANILA, Philippines — The Securities and Exchange Commission (SEC) has revoked the license of R&L Investments Inc., the brokerage company at the center of a fraudulent investment scheme.

A special hearing panel (SHP) of the SEC revoked the license of R&L and imposed monetary penalties totaling P25 million against the brokerage, its key officers and the client involved in the scheme which led to R&L’s collapse.

The SEC likewise cancelled the license of Ventures Securities Inc. (VSI) of businessman Eusebio Tanco, also for “fraudulent transfer of shares.”

Corporate regulators likewise slapped penalties totaling P32 million against VSI and its officers.

But VSI denied committing any fraudulent act “nor are we the proximate cause of any fraud which may have led to the collapse of R&L Investments.”

“We intend to exhaust all administrative and legal remedies available to us to prove that we have not committed any fraud and that we have acted well within the bounds of the rules of the SEC as well as the PSE as a broker,” said Wilfred Racadio, VSI president.

He said the case against VSI stemmed from fraudulent acts committed solely within R&L.

“Records show that a certain Marlo Moron, acting as both trader and settlement clerk, in violation of the SEC rules for a brokerage firm, with the obvious consent of the owners of R&L, executed the EQ trades.  This means he had the access code of R&L to utilize the PCD system. With the access code, Moron transferred clients’ shares to one Julieto Sulapas. Thus, any broker dealing with R&L will not know that the shares of Sulapas are not his,” VSI said.

“This fraudulent scheme took place exclusively within R&L. EQ trades are normal transactions in the stock exchange. Ventures had no inkling about the fraudulent schemes of Moron. Ventures is as much a victim as the clients of R&L,” it added.

Furthermore, VSI said it was the duty of the Capital Markets Integrity Corp. (CMIC) in the Philippine Stock Exchange to audit brokers and make sure that fraudulent acts such as those of Moron do not occur.

“Over the entire eight-year period, the CMIC, despite its duty to preserve the integrity of trades and protect the investing public, has not called the attention of R&L to anomalies being committed which can be easily discovered,” VSI said.

In November 2019, the SEC ordered CMIC, the independent audit, surveillance and compliance arm of the PSE to take over the operations of R&L Investments to protect affected customer accounts.

This came after R&L Investments collapsed allegedly due to unauthorized transfers of proprietary and client shares worth more than P700 million.

The unauthorized transfers of shares involved the transfer to the account of a certain Sulapas in VSI.

The transactions were facilitated by Moron on behalf of Sulapas while acting as a trading floor assistant and settlement clerk of R&L through EQ trades or the transfer of shares from one broker to another.

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