A SECURITIES and Exchange Commission (SEC) panel revoked the license and slapped a P32-million fine on Venture Securities, Inc. (VSI) and key officers over fraud that led to the collapse of another brokerage, R&L Investments, Inc.
In a decision dated June 11, the SEC Markets and Securities Regulation Department special hearing panel said VSI “indispensably contributed to, if they had not been the proximate cause of, the losses incurred by the clients of R&L.”
“We cannot tolerate and ignore any act or omission on the part of those involved in the capital market which would violate the norm set by the securities law, especially on the transactions and responsibilities of broker dealers and that would diminish or even just tend to diminish the faith of investors on the integrity of the capital market,” the panel said.
To recall, R&L Investments was placed under involuntary suspension in November 2019 by the Capital Markets Integrity Corp. (CMIC) after trading floor assistant and settlement clerk Marlo Moron stole over P700 million worth of client shares from R&L Investments.
The stolen stocks were transferred to a Venture Securities account under the name of Julieto Sulapas.
The SEC special hearing panel concluded that Venture Securities and its president, Wilfred Racadio, associated person Adora Aguilar, salesman Loreto Balabis, and settlement head Teresita Mosenabre did not comply with the “know-your-client” procedures and other responsibilities as required under the Securities Regulation Code.
“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,” the panel said.
According to the panel, Mr. Sulapas’ account showed that he made around 2,800 buy transactions from 2012 to 2019 despite having only five cash payments recorded throughout. The SEC noted that Mr. Balabis, Ms. Aguilar, and Ms. Mosenabre did not review the transactions.
VSI also did not maintain complete books and records.
“Moreover, VSI and its officers failed to report suspicious transactions to the Anti- Money Laundering Council and somehow even helped Mr. Sulapas evade the reporting threshold by issuing multiple checks for amounts lower than P500,000,” the SEC panel said.
The panel decided to revoke the registration and the license of VSI as broker and dealer. The brokerage was also slapped with an P8-million fine, while imposing penalties of P9 million for Mr. Racadio, P8 million for Ms. Aguilar, P5 million for Mr. Balabis, and P2 million for Ms. Mosenabre.
The VSI officers were also disqualified from being registered persons under the SRC.
“VSI and Mr. Racadio are held jointly and severally liable for the monetary penalty imposed on its officers and employees,” the SEC’s decision read.
The SEC panel said it cannot tolerate the practice of appointing “undiscerning” persons in firms involved in the capital markets, adding that those who “consciously and willfully commit” wrongful acts as officers or employees should be held accountable.
VSI has not responded to BusinessWorld’s request for comment as of press deadline. — Keren Concepcion G. Valmonte