SEC issues CDO versus Citicapital

The Securities and Exchange Commission (SEC) has issued a cease-and-desist order (CDO) against lending firm Citicapital Inc. for selling securities to the public without prior registration.

The issuance of the CDO followed an investigation conducted by the SEC’s Compliance and Enforcement Department (CED) which showed that Citicapital sold preferred shares to more than 19 persons, in violation of the 19-lender rule.

The CED said the shares were sold without prior approval of the company’s registration statement by the SEC.

The commission said Citicapital is enjoined from further soliciting investments from the public until the requisite registration statement is duly filed and approved by the SEC.

"The continued offering and sale of securities by Citicapital without the requisite registration may cause grave and irreparable injury and prejudice to the public. Thus, this must be restrained if only to protect the innocent investing public," the SEC said.

The SEC has, likewise ordered Citicapital to explain why the CDO should not be made permanent. Citicapital may file a formal request for the lifting of the CDO within five days from receipt of the order.

The SEC said Citicapital should state in its request whether it is willing to enter into a settlement offer and would opt for summary procedure.

Citicapital, a leading player in the highly-competitive micro-credit sector in the Philippines, was assessed a P1.41 million penalty by the SEC which to date has not yet been complied with.

The SEC had earlier formed a committee to look into the operations of financing and lending companies on concerns that some of these firms are engaged in fraudulent activities.