The Securities and Exchange Commission (SEC) has revoked the license of stock broker Venture Securities, Inc. (VSI) and fined the company and its officers P32 million for the fraudulent transfer of client shares from R&L Investments, Inc.
In a decision dated June 11, 2021, the SEC said its special hearing panel “found acts and omissions” on the part of VSI and its officers that “indispensably contributed to, if they had not been the proximate cause of, the losses incurred by the clients of R&L.”
The decision stemmed from the illegal transfer of shares from R&L Investments to VIS by an errant employee.
This led the SEC to order the Philippine Stock Exchange’s unit Capital Markets Integrity Corp., (CMIC) to take over the operations of R&L following the discovery of unauthorized transfers of shares to the account of a certain Julieto Sulapas in VSI.
“The transactions – facilitated by one Marlo Moron on behalf of Mr. Sulapas while acting as a trading floor assistant and settlement clerk of R&L through the transfers of shares from one broker to another resulted in the loss of P700 million worth of client shares in R&L, one of the oldest brokerages in the Philippines,” the SEC said.
The SEC said VSI and its president Wilfred Racadio, associated person Adora Aguilar, salesman Loreto Balabis and settlement head Teresita Mosenabre failed to “observe know-your-client procedures and other controls mandated by Republic Act No. 8799, or the Securities Regulation Code (SRC) and its implementing rules and regulations (IRR).
“For one, the concerned officers of VSI were not present when Mr. Sulapas opened an account and failed to verify the authority of Mr. Moron to transact on behalf of Mr. Sulapas,” it noted.
The SEC said that separate investigations conducted by CMIC and the SEC Markets and Securities Regulation Department (MSRD) showed that Sulapas’ transactions under his VSI account worth P9.9 billion were “grossly disproportionate” to his declared total net worth, liquid net worth, and annual income of less than P1 million, based on his Customer Account Information Form as of October 2017.
