Legarda said a revitalized PSE would encourage small investors to put their money into listed companies and steer them away from pyramiding and other pseudo-investment firms.
"Legitimate companies can never offer the unbelievable return on investments (ROIs) that scam and con artists tempt people with. But clearly, small traders are more protected investing in the stock market," she said.
The lady solon blamed the proliferation of investment scams on the lack of viable investment opportunities in the country. "More Filipinos are into investing these days and this augurs well for the economy in the long run," she added.
On the plan of the PSE to relax its listing rules, Legarda said reforms are most welcome but nonetheless warned against defanging the check-and-balance mechanisms that protect investors.
According to newly elected PSE chairperson Alicia Rita Arroyo, the minimum market capitalization for companies that want to list in the second board has been brought down from P250 million to P100 million.
"More than this, it’s important for the PSE to keep its requirement that companies have to show a track record of profitability and a long-standing operating history," Legarda stressed. "These requirements would weed out fly-by-night firms that usually run away with the money of their investors."
At the same time, Legarda said the PSE and the Securities and Exchange Commission (SEC) should keep a tight watch on highly irregular trading activities that have been the bane of bourses worldwide.
"The books of listed companies should be always available for scrutiny by the stockholders and regulating bodies, and their veracity vouched for by company officials similar to what is being done in the United States following the Enron and WorldCom scandals," she concluded.