SEC orders thorough audit of 12 broker companies

The Securities and Exchange Commission (SEC) has ordered that a more thorough audit be conducted on the 12 broker firms earlier found to have allegedly violated provisions of the Securities Regulation Code.

SEC Chairman Lilia R. Bautista said: "It was agreed upon that an in-depth extended audit be conducted on the 12 brokers to further validate the group’s findings."

Bautista said the PSE would have to hire external auditors to validate the group’s findings.

The PSE’s Compliance and Surveillance Group and representatives from the SEC have jointly conducted an audit on the book and records of broker-dealer firms to determine their compliance with the provisions of the SRC.

Findings showed that 11 brokers allegedly failed to maintain the required net capital of P5 million while one broker reportedly failed to comply with the books and records rule.

Under Section 52 of the Securities Regulation Code, every broker or dealer is required to make available all reports, accounts, correspondence, books and other records at any time during periodic or special examinations by the SEC for the protection of the investing public.

The audit, which ran from Oct. 1 to Nov. 30 last year, was in line with the corporate watchdog agency’s efforts to safeguard the interest of the public and ensure that broker firms comply with the securities law.

Under the SRC, the Commission may, on its own initiative, conduct periodic or parrallel examinations of PSE member-brokers to validate the exchange’s findings.

Bautista said the brokers would be penalized if the extended audit would show that they have indeed violated securities rules.