Pre-need sector not an Enron, says SEC

The Securities and Exchange Commission (SEC) and pre-need industry members have refuted reports which named 18 companies as not having complied with SEC accounting regulations, and comparing the industry to American power firm Enron.

"The situation with the pre-need industry is not comparable with Enron because we can assure the public that we are monitoring it," said Emil Aquino head of the non-traditional securities and instruments department of the SEC. He added that there was no cause for pre-need industry clients to be concerned as any violations are being properly addressed.

He pointed out that pre-need firms have until December to comply with the SEC’s new accounting regulations. It was also stressed that untimely disclosure to the public of regulatory action being done can worsen the situation.

Banking industry leaders said that such press reports cause undue alarm and cause damage to the industry. "This is how a bank run begins, with the coming out of unfounded reports which cause the public to react adversely," said the source. The pre-need industry has P20 billion in trust fund and kept in major banks.

"We hope that the media will be more careful and circumspect when coming up with such reports," the source added.

Industry leader CAP education plan expressed disappointment over the report, saying it has been unfair to the company and the pre-need industry as a whole. CAP stressed that it has and will continue to comply with all SEC regulations as it has done in the past.

CAP reiterated that it is very much liquid with almost double the trust fund liquidity requirement set by the SEC. It has already infused an additional P137 million in trust funds, with P2 billion set to be added soon. It has paid over P7.3 billion in tuition graduating over 40,000 students.