SEC probe into alleged P2.6-billion unauthorized trading begins next week
THE Securities and Exchange Commission (SEC) has formally launched a probe into an alleged P2.6-billion unauthorized trading by brokerage DW Capital, Inc. (DWCI), with a hearing set for Tuesday next week.
In a statement emailed to journalists on Friday, the SEC’s Markets and Securities Regulation Department said it set a “clarificatory hearing” for Aug. 29, kickstarting the investigation process first ordered by the corporate regulator on Aug. 18.
The SEC was acting on a petition filed by the Philippine Stock Exchange’s (PSE) watchdog Capital Markets Integrity Corp. (CMIC) which sought to take over the operations of DW Capital.
The core allegation is that the brokerage house “engaged in unauthorized trading of securities involving five (5) accounts which have total market value of short positions in the amount of PhP2,599,324,718.00 as of July 28, 2017,” according to the SEC-emailed document.
The case was brought to light after lawyers of the clients of DW Capital asked the PSE watchdog in early August to “prohibit DWCI from trading the shares of stock of their clients, and to direct DWCI to preserve the records of transactions pertaining to subject securities.”
DW Capital clients had wanted the “immediate delivery” of their shares of stocks, and so on Aug. 10, the PSE’s CMIC suspended the brokerage firm from trading the listed securities.
The PSE had sought the SEC’s intervention as under the Securities Regulation Code, the corporate regulator has the power to order an exchange or a self-regulatory organization (SRO) to take over the operation of a failed trading participant to protect the investing public.
The PSE’s CMIC is a self-regulatory organization and the primary regulator of the local stock market’s trading participants.
The SEC said DW Capital has yet to submit the documents and records it required the brokerage firm to submit under a subpoena duces tecum it handed down last Aug. 18. The brokerage earlier sought to partially quash that subpoena.
Those documents include the customer master list, stock position report detailed per customer, per stock, per location; portfolio reports; transaction reports; account ledgers; statement of accounts; confirmation invoices; and customer account information forms.
