The SEC En Banc authorized CMIC to manage Equitiworld’s operations and settle its debts to customers, the Philippine Stock Exchange, and other trading participants.
CMIC will take control of records and assets, sell assets to cover liabilities, and oversee payment claims, a notice from the watchdog showed.
Equitiworld Securities, which is currently suspended, lists Antonio A. Lopa as a nominee.
CMIC special audit unmasks financial anomalies
CMIC discovered a major discrepancy of 154,910,321 shares worth P46.1 million between Equitiworld’s stock position report and business partner portfolio report, the Securities and Exchange Commission said in a separate notice on Wednesday.
CMIC also found inconsistencies in Equitiworld’s cash reporting. It said the Risk-Based Capital Adequacy Ratio Report listed zero cash on hand as of June 2024, while the company’s system software showed P23.6 million.
“The foregoing affirms the variances and/or discrepancies found by the CMIC, and clearly reveals that EQWORLD doesn’t have these shares (or the shares in its possession are not sufficient to satisfy the demands of its customers) and/or it does not have sufficient cash to pay the proceeds of the sale of shares,” the SEC said.
The record also showed that the company failed to comply with the unimpaired paid-up capital requirement, it added.
Numerous complaints versus broker
CMIC had earlier suspended Equitiworld’s trading operations, stating that the brokerage’s ongoing activities were a serious breach of securities laws and posed a significant risk to its customers and the wider investing public.
“The Commission also cited the repeated late cash payments and cash fails on the part of EQWORLD; the numerous complaints and claims received by CMIC for the inability of EQWORLD to comply with their demands for the delivery of securities, including the transfer of their securities to other trading participants or payment of sales proceeds,” the corporate regulator said.
Other violations
The SEC Markets and Securities Regulation Department discovered additional violations of the Securities Regulation Code and its rules by Equitiworld.
These included failing to submit audit documents, annual financial statements, and compliance reports, along with refusing to follow CMIC’s orders.
What’s next?
Equitiworld customers are advised to file claims and will receive guidance on next steps, while potential legal actions against Equitiworld are still being considered.
“Customers of Equitiworld are requested to send their claims against the trading participant and other relevant information to info@cmic.com.ph and ied@cmic.com.ph,” CMIC said in a notice.
