THE Securities and Exchange Commission (SEC) has added registered funding portals as authorized registrars of qualified buyers of securities under the rules governing crowdfunding.
SEC Memorandum Circular No. 12, posted on the agency’s website on Sept. 6, has amended Section 39.1.4.1 of the implementing rules and regulations of the Securities Regulation Code (SRC) to include funding portals registered under the SEC Crowdfunding Rules in the list of authorized registrars of qualified institutional buyers and individual buyers of securities.
SEC Commissioner Kelvin Lester K. Lee said the amendment is part of the corporate regulator’s efforts to give more options to stakeholders.
“The SEC wanted to expand such functions to crowdfunding portals thus allowing more options to stakeholders. It is also part of the commission’s overall direction to boost the capital markets,” Mr. Lee told BusinessWorld via mobile phone.
“By supporting crowdfunding portals, among others, the commission ensures that there are viable alternative means to raise capital available to the public,” he added.
Authorized registrars are entities that have been granted the appropriate secondary license by the commission. They may be authorized to act as a registrar upon proper application and compliance with registration requirements.
Aside from funding portals registered under the SEC crowdfunding rules, the SEC said other authorized registrars are banks (with respect to their registration as broker-dealer), government securities eligible dealer, government securities brokers, and/or underwriters of securities.
Other authorized registrars are brokers, dealers, investment houses, investment company advisers, and issuer companies (with respect to offerings of their own securities).
On Aug. 18, the SEC issued the proposed amendments to the SRC and sought the comment of interested parties until Aug. 24.
Meanwhile, the SEC said in a separate statement that it secured the conviction of six individuals involved in an investment scam operated by GDM Finance SARL, making it the 22nd conviction for violations of the Philippine securities law.
In a joint decision dated April 17, the Pasig City Regional Trial Court (RTC) Branch 158 deemed Anita E. Armada, Milany P. Cabrera, Josephine D. Maranan, Nanette D. Tongco, Gerald L. Samson, and Jacinto Lucio P. De Catalina guilty beyond reasonable doubt of violating Sections 8 and 26 of the SRC. The individuals were sentenced to pay a P100,000 fine each, with subsidiary imprisonment.
The individuals were arrested following an entrapment operation of the SEC’s Enforcement and Investor Protection Department (EIPD) with the Philippine National Police Anti-Cybercrime Group in November 2018.
“The case stemmed from an information received by the SEC EIPD in July 2018, alleging that GDM had conducted a seminar in a mall where speakers enticed the audience to invest in GDM for a weekly return of at least 2.5%,” the corporate regulator said.
“After conducting an on-site field investigation, the EIPD confirmed that GDM indeed engaged in investment-taking activities. The investigation also uncovered that GDM had a Facebook account where it advertised that it could pay dividends to shareholders and provide a steady return on investment received,” it added.
Under Section 8 of the SRC, the sale or distribution of securities without first being registered with the SEC is prohibited. Section 26 of the law also forbids individuals from employing fraud, deceit, and omission to garner investments from the public.
“GDM had not registered any securities with the commission as required under the SRC. Neither had it secured a license to issue mutual funds, exchange-traded funds and proprietary or non-proprietary shares or membership certificates and timeshares,” the SEC said.
The SEC has secured the conviction of 33 individuals in 22 cases meted by the courts with a total imprisonment of 712 years and an aggregate fine of P28.4 million, as of writing.
As of September, 355 individuals are being actively prosecuted before the RTCs in 145 cases for violations of the SRC and two cases for violations of Republic Act No. 11765 or the Financial Products and Services Consumer Protection Act.
The SEC has filed criminal complaints against 31 corporations and 239 individuals before the Department of Justice as of June 30, all of which are currently pending resolution. — Revin Mikhael D. Ochave