SEC stands pat on new disclosure rule


The Securities and Exchange Commission (SEC) is prepared to defend its position in requiring securities brokers and dealers to disclose the beneficial owners of shares in line with the foreign ownership limits in partly nationalized industries, as well as to deter money-laundering activities.

SEC Chairperson Teresita Herbosa told reporters Monday the regulator was justified in imposing additional requirements on securities dealers and stockbrokers.

“They [Philippine Association of Securities Brokers and Dealers Inc.] applied for a TRO against some provisions in our new implementing rules and regulations. But since their application was denied by the court as they failed to establish that the IRR poses grave and irreparable injury to them, then the recently issued 2015 IRR stands,” Herbosa said.

She added that the SEC was prepared to defend the IRR through the Office of the Solicitor General.

Last month, Pasbdi filed a petition for relief, seeking to nullify certain provisions in the 2015 IRR of the Securities Regulations Code.

The provisions include the amendments introduced to increase transparency in the transactions of brokers and dealers, specifically the beneficial ownership disclosure requirement, which is in line with the Foreign Investments and Anti-Money Laundering acts.

“We have given them four-long years to raise their concerns to us when we were still in the
process of drafting the IRR, none of them assailed the intended amendments that we wanted to make,” Herbosa said.

She said the requirement comes on the heels of a Supreme Court’s order to the SEC in the case of Gamboa v. Teves, ordering the SEC to look into the beneficial ownership of corporations and ensure that limits on foreign ownership aren’t breached.

“Beneficial ownership of stocks,” presupposes that the stock holdings being managed by the brokers or dealers on behalf of their respective clients are not registered under the name of the real owners of the shareholdings.

Such scheme is usually employed to circumvent the law limiting foreign equity to 40 percent in partly nationalized industries.

Under the 1987 Constitution, these industries include the operation and management of public utilities, advertising, mining and exploration, development and use of natural resources.

The scheme may also be employed by people who have amassed wealth through unlawful activities such as smuggling, kidnapping, drug trafficking, and bribery, by investing the proceeds of their illegal activities in the equities market, but such purchases are registered under the name of another person to conceal their identities and interests in certain companies.


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