SEC Chairman Lilia R. Bautista said: "We’ve been receiving reports that several companies have been trading foreign currencies without the necessary license. We cannot act on these complaints because the CA ruled that the SEC has no jurisdiction over financial futures."
"We hope that the CA will react soon so we will know what to do with these firms. Foreign currency trading firms have been proliferating because there is no agency going after them," Bautista said.
Currency trading scams often attract customers through advertisements in local newspapers or attractive Internet sites.
The SEC has warned the public to take special care to protect themselves from the various kinds of frauds being perpetrated in today’s financial markets, including those involving "foreign currency trading."
These companies entice investors to put their money in speculative futures currency trading market. Investors are assured that their investments will earn high profits with minimal risks.
The currency futures market is volatile and contains substantial risks for unsophisticated investors.
In futures currency trading, the value of a currency, the US dollar in this case, is hedged on the expected exchange rate on a particular period. It allows one to purchase or sell a specified currency at a specified price on a specified settlement date.
If the rate is substantially lower, then the investor automatically loses but if it is higher, then he earns the margin.
The SEC said the bogus operations of these companies are creating pressure on the foreign exchange rate.
Although the Philippine Dealing System (PDS), the country’s electronic currencies exchange, is directly under the supervision of the Bangko Sentral ng Pilipinas, the SEC can look into corporations involved in the foreign exchange market.
Under Presidential Decree 902-A or the SEC Law, the Commission is authorized to investigate, on complaint or motu propio (on its own), any act or omission of the board of directors/trustees of corporations, or of partnerships, or of other associations, or of their stockholders, officers or partners.
The power extends to probing fraudulent devices, schemes or representations in violation of any law or rules and regulations administered and enforced by the Commission. After investigation, the commission can file an appropriate case in court and prosecute it in accordance with the law and SEC rules and regulations.