PSE watchdog to take over theft-hit brokerage

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Metro Manila (CNN Philippines, November 15) —The independent audit, surveillance, and compliance arm of the Philippine Stock Exchange (PSE) is set to take over the operations of one of the country’s oldest brokerage firms that ceased operations due to a multi-million peso theft.

In a statement Friday, the Securities and Exchange Commission (SEC) said it has ordered Capital Markets Integrity Corporation (CMIC) to operate R&L Investments, Inc. to protect the brokerage's affected customers.

The 50-year-old company was reportedly forced to stop operating last week after stocks worth more than ₱700 million were allegedly stolen by one of its employees.

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

The SEC said it ordered CMIC to preserve the assets and books and records of R&L investments and execute acts or documents necessary or appropriate in carrying out its powers.

CMIC, the regulator added, was also tasked to determine the various violations possibly committed by the brokerage firm, its officers, and employees.

The PSE watchdog will submit a report and recommendation to SEC’s markets and securities regulation on possible administrative or criminal action against those responsible for the theft.

“The findings of CMIC, however, shall not preclude the Commission from continuing its own examination, investigation, or filing of any action against respondent R&L Investments and its responsible officers and employees,” SEC said.

The regulator said R&L booked client securities worth ₱738 million in its financial statements last year. However, a business partner report from the Philippine Depositary & Trust Corp. showed that the brokerage’s client portfolio only amounted to ₱132 million.

With net assets of ₱46.8 million, the brokerage will have a negative equity of ₱559.8 million, SEC said.

Under the Securities Regulation Code, PSE, upon SEC’s order, can take over a listed firm and “immediately proceed to settle the member firm’s liabilities to its customers” should its financial condition deteriorate and fail to meet the demands of its customers.