SEC firm on new rules enforcement


The Securities and Exchange Commission has vowed to strictly enforce its controversial implementing rules and regulations, which among other provisions, aims to combat money-laundering activities in the capital markets.

SEC Chairperson Teresita Herbosa told reporters on Thursday that the 2015 IRR of the Securities Regulations Code (SRC) aims to create a culture of transparency and accountability.

“Thus, If we have these rules in place [beneficial ownership disclosure rule]in place it will deter people from opening fictitious accounts that could be used in nefarious activities like money laundering,” Herbosa said.

Meanwhile, in a separate chance interview with reporters on Thursday, SEC Associate Commissioner Ephyro Luis Amatong said that since the temporary restraining order (TRO) against some of the provisions of the 2015 IRR of the Securities Regulations Code (SRC) has already lapsed, the agency is now legally bound to strictly implement its rules.

“The TRO has lapsed, thus all those provisions that have been the subject of the restraining order are now being implemented by the SEC,” Amatong said, adding that the TRO had expired last week.

Amatong is referring to the TRO issued by the Regional Trial Court, Branch 212 of Mandaluyong City against certain provisions in the 2015 IRR, after the Philippine Association of Securities Brokers and Dealers Inc. (Pasbdi), the umbrella organization of brokers, filed a petition for declaratory relief with application for TRO and Writ of Preliminary Injunction against most of the provisions of the 2015 IRR of the SRC.

The assailed provisions included those that require brokers to disclose the beneficial owners of stocks being managed by brokers for their respective clients as well as the provisions that aims to shield the country’s capital markets as a means or flow-through entity to commit money laundering.

The SEC’s chairperson, along with the commissioner of the Insurance Commission, is a member of the Anti-Money Laundering Council (AMLC), which is chaired by the governor of the Bangko Sentral ng Pilipinas.

The anti-money laundering provisions, which are closely related to the beneficial ownership disclosure rule under the 2015 IRR had also been included in the TRO and the ongoing declaratory relief petition by Pasbdi before the trail court of Mandaluyong City.
These provisions are the following:

The prohibition on brokers from maintaining numbered accounts for trading and investment purposes of their clients or their own (SRC Rule 52.1.61);

The prohibition on brokers from creating new accounts without face-to-face meeting (SRC Rule;

The requirement for brokers to carry out basic ‘know your customer’ (KYC), which mandates brokers to maintain for each account the essential information about their customers such as customer’s name, residence, address, office address, principal business address and their corresponding phone numbers and mobiles numbers, among others;
The requirement for brokers to have on file all Anti-Money Laundering Act resolutions, updated with any new AMLA resolutions released by the AMLC;

The provision requiring brokers to have websites showing the names, current photos and contact details of their directors, principal officers, associated persons and salesmen;
“This will allow investing public to easily verify if the person transacting with them are indeed licensed and connected with the brokerage firms,” the SEC said; and finally,
The provision enabling SEC to conduct effective surveillance and investigation by requiring brokers to provide regular access to particular accounts, orders, trading accounts and the names of corresponding clients, for reconstruction of trade events.


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