CMIC taking over R&L Investments

CMIC is expected to come up with a report and recommendation to the SEC within seven days from the conclusion of its audit and not later than 20 December 2019.

The Securities and Exchange Commission (SEC) on Friday said it has ordered Capital Markets Integrity Corp. (CMIC) to take over R&L Investments, Inc. following the stock brokerage’s collapse due to a P700 million theft committed by an employee.

The corporate regulator said the order, issued on 14 November, will protect R&L’s customer accounts and preserve its books, records and trade-related assets as well as settle liabilities to R&L customers.

CMIC serves as the independent audit, surveillance and compliance arm of the Philippine Stock Exchange (PSE).

The SEC said it is acting in accordance to section 33 of the Securities Regulation Code, which states that the PSE, upon the SEC’s order, shall take over the operations of a member firm whose financial condition “has so deteriorated that it cannot readily meet the demands of customers for the delivery of securities and/or payment of sales proceeds.”

CMIC launched a probe into R&L on 8 November following reports that the broker is facing shutdown after its settlement clerk, Marlo Moron, allegedly made unauthorized transfer shares worth P700 million into an account in brokerage firm Venture Securities, Inc. under the name Julieto Sulapas.

CMIC is expected to come up with a report and recommendation to the SEC within seven days from the conclusion of its audit and not later than 20 December 2019 in regards to various violations of SRC provisions possibly committed by R&L or its officers and employees.

Meanwhile, the SEC said it will also continue its own investigation or the filing of any action against R&L or any of its responsible officers and employees.

According to the Philippine Depository & Trust Corp. (PDTC), R&L’s client portfolio to date only amounted to P132 million, inconsistent with its 2018 audited financial statements wherein it had booked client securities worth over P738 million.