SEC chairperson Lilia R. Bautista said the commission might be forced to order the creation of an independent compliance and surveillance corporation as it continues to receive complaints from PSE’s compliance officers that some bourse officials have been wielding their influence on certain cases being investigated for violation of securities rules.
Bautista said the PSE has to justify why it should still be allowed to run the internal compliance and surveillance department. "Why can’t they set up a separate corporation? They have to tell us their reasons. They haven’t given us any concrete explanation for their refusal to set up an independent compliance and surveillance corporation," she said.
Sources said one broker-director whose firm was fined P50,000 by the Compliance and Surveillance Department (CSD) had sought the assistance of newly-elected president Cayetano Paderanga in talking the CSD to defer the payment of the fine.
The PSE had been opposed to the creation of an independent compliance corporation because this would entail additional costs.
The CSD is a critical unit of the PSE that monitors market conditions and trading activities to detect violations of the securities law and exchange rules, including sales practices and financial and operational requirements.
It also monitors compliance by listed companies of continuing listing obligations and duties of members of the managing body of issuers to minority shareholders.
But the SEC believes that the CSD shall not be subordinated or otherwise controlled in its activity by the board or PSE management and shall be responsible for carrying out the PSE’s disciplinary role.
The SEC underscored the need to create an independent compliance and surveillance corporation to ensure the integrity of the exchange. This also followed a PSE audit which exposed fraud and other violations by a number of brokerage houses.
Bautista said earlier the commission was also considering hiring a group to take charge of the PSE’s compliance and surveillance functions to maintain objectivity of audits.– Zinnia dela Peña