Investors ask SEC to probe Wincorp

Disgruntled unidentified investors of collapsed investment house Westmont Investment Corp. (Wincorp) are asking the Securities and Exchange Commission (SEC) to conduct an investigation of stockholders and owners of the firm, including United Overseas Bank (UOB), formerly Westmont Bank.

In a letter to the SEC's prosecution and enforcement department (PED),

Apollo X.C.S. Sangalang, legal counsel for the unnamed investors, who are both depositors of UOB and holders of securities issued by Wincorp, urged the corporate watchdog to look into the past and present stockholders and beneficial owners, directors, officers and employees of the investment house and the bank.

Sangalang said Wincorp and Westmont Bank-UOB should be prosecuted administratively and criminally for various violations of the Revised Securities Act (RSA).

The investors claimed that through branch offices and personnel of UOB, they were lured into diverting funds previously deposited with the bank, and transferring their investments in securities offered by Wincorp in the form of a "confirmation advice."

Sangalang said the confirmation advice was made to appear that the investors invested their "hard-earned money" in previously undisclosed third party "borrowers," and that Wincorp merely brokered the transactions.

"Our clients were conditioned to believe that they were investing in securities guaranteed and/or underwritten by Westmont Bank-UOB and/or Wincorp as they were never shown any prospectus, financial statement or debt instrument issued by these alleged "borrowers."

Sangalang said that after a background check, the alleged borrowers eventually turned out to be merely fronts of some of the past and present beneficial owners, stockholders, directors and officers of Westmont-UOB and Wincorp.

"Based on these, Westmont Bank-UOB and/or Wincorp clearly violated the RSA by offering to the general public securities which are not exempted from SEC registration, by way of a transaction which is likewise not exempted."

Sangalang said both Westmont-UOB and Wincorp could be cited for violating Sections 8 and 16 of PD 129 or Investment Houses Decree in relation to Republic Act 8366, RA 2629 or Investment Company Decree and other existing laws, rules and regulations being enforced by the SEC as well as PD 1689 in relation to the Revised Penal Code.

There are said be about more than 2,000 Wincorp investors, many of whom are said to be preparing the legal groundwork for what they anticipate to be a lengthy legal battle with the company.

Wincorp, associated with former Finance Secretary Edgardo B. Espiritu, is now saddled with debts of about P7 billion.

Earlier, another unit of the SEC, the brokers and exchanges department, had been conducting an audit into Wincorp's finances, but this was put on hold. The SEC is still trying to determine if Wincorp violated the 19-lender rule prohibition under the General Banking Act which limits to 19 the number of investors or lenders in an investment house. -