SEC mulls charges against owners of Platinum Plans

The Securities and Exchange Commission (SEC) is looking into Platinum Plans Inc. for possible filing of criminal charges against its owners and management due to reports of alleged misappropriation of funds that led to the collapse of the pre-need firm.

SEC chairman Fe Barin said the filing by Platinum Plans of a petition for suspension of payments with the court will not stop the commission from investigating the pre-need firm and imposing whatever sanctions as may be necessary.

"The filing will not bar us from pursuing criminal or administrative sanctions against the company," Barin said.

Platinum sought a moratorium on the payment of its debts to allow it to map out a viable recovery plan.

Platinum believes that given enough breathing space it would be able to settle all maturing obligations given the realizable value of its existing assets. In its petition, Platinum said it could settle only up to P75 million of its maturing obligations to plan holders.

The pre-need firm intends to sell assets to raise funds to cover obligations to planholders.

The SEC has been receiving complaints from the public against Platinum Plans for delayed or non-payment of maturing obligations. The pre-need firm has also been accused of issuing bouncing checks.

Based on SEC records, Platinum has an actuarial reserve liability of P470.1 million as against trust fund assets of P192.76 million, resulting to a trust fund deficiency of P277.34 million.

Platinum Plans has also been found to have failed to remit monthly deposits to its trustfund in violation of the rules of pre-need firms. The firm’s trust fund is made up mostly of real estate.

Apart from this, the pre-need firm was found to have failed to submit its audited financial statements and actuarial valuation report for 2004.

Platinum Plans is among the 12 pre-need companies on the SEC’s watchlist. Others being monitored closely by the SEC include TPG Corp., Prudential Life Plans, PET Plans, Eternal Plans, Eduplan Phils., Legacy Consolidated Plans, Pryce Plans, Trusteeship Plans, and Scholarship Plan Phils.

An SEC official, however, clarified that not all these firms have liquidity problems. These firms, the SEC source said, were being monitored because they offered open-ended plans.

In open-ended plans, a pre-need firm pays the tuition of a beneficiary regardless of the amount. Before 1992, tuition increases were limited to no more than 15 percent each year.

When tuition fees were deregulated in 1992, most of the pre-need companies stopped selling the open-ended educational plans.

The 12 pre-need firms offered a total of 796,263 open-ended plans worth P30.037 billion. When combined, the ARL of these companies amounted to P32.76 billion, P23.25 billion of which accounted for CAP.

The ARL is the present value of all current and future tuition availments. It is based on inflation, interest rates, and expected tuition fee increases, among others.

The ARL is the present value of all current and future tuition availments. It is based on inflation, interest rates, and expected tuition fee increases, among others.

A measure of how healthy a pre-need company is whether its trust fund is equal to or exceeds the ARL. The trust fund is the pool of premium payments from planholders that had been invested.

The number of pre-need firms licensed by the SEC to sell securities to the public dropped to 33 from 42 last year.

Among the companies that are not licensed to sell pre-need plans are Platinum, Celestial Memorial Plans, East Asia Plans, FCM Plans Inc., Garden of Memories Memorial Plans, Gillamac Life & Pension Plans, Pension & Retirement Plans Corp., Samson Memorial Plans, and Special Plans.