Wincorp asks SEC to recall CDO

Westmont Investment Corp. is asking the Securities and Exchange Commission to scrap a cease and desist order (CDO) preventing the company (Wincorp) from continuing its operations.

Legal counsels for Wincorp, Romulo Serrano & Carmello Law Offices filed a motion for reconsideration with the SEC, and asked to be furnished documents to justify the issuance of a CDO.

The SEC last week slammed the CDO on Wincorp, preventing it from further soliciting and issuing commercial papers. The SEC said based on complaints of several investors, present and previous stockholders and beneficial owners of Wincorp and affiliate bank, United Overseas Bank Philippines (formerly Westmont Bank), violated several laws of the Revised Securities Act, particularly the 19-lender rule which prohibits investment houses from securing loans from more than 19 creditors.

The SEC said its investigation showed Wincorp has been offering to the general public unregistered securities in the form of a confirmation advice (CA). Its business of lending or extending credit to corporations or individual borrowers, requires the execution of a promissory note and loan agreement payable to Wincorp.

Prior to extending credit, Wincorp looks for funders who are mostly individuals and issues them a CA, using the loan agreement as reference collateral. The CA, considered a commercial paper (CP) under the new rules on registration of short term CPs, has not been registered with the SEC nor is it exempt from registration under the said rules.

Wincorp's counsels disputed these findings, pointing out that the promissory notes required from the borrowers are payable to Wincorp as the agent of the lenders of the borrowers.

Leonard de Vera, head of Wincorp's legal team, said the confirmation advice is not negotiated in violation of the new rules on registration of CPs.

De Vera said the SEC should also furnish it documents as a matter of fair play and due process.