PSE creates 'prosecution fund' against erring brokers

The Philippine Stock Exchange will soon be coming out with “prosecution fund" intended to assist individual stock market investors in filing and prosecuting a criminal case against a trading participant. In a statement, the PSE said its board approved the creation of the fund following “hard lesson" that the PSE has recently learned. “The recent experience with failed brokers has taught the PSE a hard lesson. We endeavor to ensure investor protection from all possible fronts," said Francis Lim, PSE president and chief executive officer. An individual with a direct investment in any of the securities listed on the Exchange may request in writing through the Market Regulation Division (MRD) financial assistance through the fund to file and prosecute a criminal case fulfilling the following requirements: The criminal case is against a trading participant, its directors, officers and/or agents; The investor will jointly or collectively prosecute the case together with at least four (4) other similarly situated investors; The actual civil claim of the investor against the trading participant shall not be less than P200,000; and It is based on, related to, a violation of the Securities Regulation Code and its implementing rules and regulations. The Market Integrity Board, upon a favorable recommendation from the MRD, will have the authority to decide whether to grant any financial assistance to an applicant provided that the maximum amount of the grant for each applicant shall not exceed P100,000. The mechanics for the disbursement of the fund will be subject to the implementing guidelines of the Exchange. All penalties collected by the PSE from trading participants will be automatically allocated for the prosecution fund. “The fund is part of our corporate governance initiatives to help ensure that stock market investors are protected. Definitely, it is one of the building blocks to increase investor confidence in our stock market," Lim said. Last week, the PSE published a memo for brokers dated May 8, wherein it found that only a quarter of the trading participants were found to be fully compliant. These are: AB Capital Securities Inc., Apex Philippines Equities Corp., DBP-Daiwa Securities SMBC Philippines Inc., Evergreen Stock Brokerage & Securities Inc., Fidelity Securities Inc., First Metro Securities Brokerage Corp., First Orient Securities Inc., JSG Securities Inc., Lopez, Locsin, Ledesma & Company Inc., Macquarie Securities (Philippines) Inc., and Mount Peak Securities Inc. Completing the list are Phil-Progress Securities Corp., Platinum Securities Inc., PNB Securities Inc., R.S. Lim & Company Inc., RBS Asia Securities Inc., Tansengco & Company Inc., Tri-State Securities Inc., UBS Securities Philippines Inc., UOB-Kay Hian Securities (Philippines) Inc., Value Quest Securities Corp., Vicsal Securities & Stock Brokerage Inc. and Yu & Company Inc. - GMANews.TV