• SEC wants power to look into bank accounts


    THE Securities Exchange Commission (SEC) is seeking amendments to the Securities Regulation Code (SrC) and among its proposed revisions is for the corporate regulator to be granted the power to look into bank deposits during investigations of securities fraud cases.

    SEC Chairperson Teresita Herbosa told reporters last week that the SEC has already sent a proposal to Congress to amend the SRC and she hopes it would done before the term of President Benigno Aquino 3rd ends next year.

    “We’re still in the process of application. Yes, we’ve already talked [with lawmakers]. In fact, Senator [Sergio] Osmena [we]would say was very supportive, he understands the need for such legislation. Of course we have to talk to our lawmakers [further]and give them the full situation. Some probably don’t realize how important this is,” Herbosa said.

    Herbosa said one of the proposed amendments will enable the SEC to look into bank deposit accounts in cases of securities fraud probe. This is not possible under existing bank secrecy laws which are very restrictive.

    The SEC, along with the government’s financial cluster the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR), has been keen in easing—if not altogether eliminating—the bank secrecy law, which restricts access to bank records.

    The SRC clause on easier access into bank deposits, Herbosa said, should be pushed as it would provide faster “information sharing,” which is a requirement of the International Organization of Securities Commissions (Iosco) before a country can be at par with international standards and be able to join global cooperation between commissions.

    Iosco is an association of corporate regulators that manages the securities and futures markets globally.

    The country has been applying to be a part of Iosco. This is a first step into joining an Asean trading link that will connect trading in regional exchanges.

    “[For the SRC amendment proposal in Congress,] if we cannot [do it this year]because of the time constraints now and because of the election year, I think the very first congress under the next administration should be able to tackle it,” Herbosa said.

    The proposed amendments also seek to give the regulator the ability to “issue a cease and desist order against investment frauds and securities violations” and also “have the power to either subpoena banks to give us records or for us to have access.”

    The SEC chair said the proposed amendment of the SRC is in preparation “for us to be able to present to the Iosco finally that we will be working on these types of legislations.”

    “Right now, if you look at our Securities Regulation Code, there are already provisions there that would aid us to investigate securities fraud and you’ve seen that also in our handling of matters involving investment scams. But in order to really fully make it more expeditious, we really have to have access to bank records,” Herbosa said.

    “The Iosco requirement is really on information sharing. It is something like a country outside is doing an investigation, and they would like information from us. What if that information is concerning a bank account [here], [but]you cannot [access it]? That also prevents us from asking their help because how will they help us if we don’t help them,” the SEC chair explained.

    “The suggestion really, the very strong suggestion, is that we just have to propose to legislature to relax the bank secrecy law in terms of being able to investigate or exchange information with our counterparts regarding securities fraud,” she added.

    Herbosa said the easing of the bank secrecy law will be beneficial also to taxation as it would allow the BIR to investigate hidden taxable deposits and would be in line with Philippine participation in the Asia Region Funds Passport (ARFP), a multilateral arrangement that will facilitate the cross-border marketing of managed funds among participating economies.

    “[For the ARFP,] imagine if you are able to sign off on that, then our mutual funds [can have exposure]and there are quite a number here that can list in other countries. [This will work like] some sort of a visa, that you bring it around and people have already subscribed to such mutual fund,” Herbosa said.

    Last August, the SEC approved the SRC’s revised implementing rules and regulations (IRR) which include changes in shelf registration program, underwriting provisions, selling of securities whether debt or equities, as well as a facelift of the tender offer rules which are required in company buyouts.



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