SEC issues show-cause letters to 4 pre-need firms

The Securities and Exchange Commission (SEC) has issued separate orders directing four other pre-need companies to explain why they should not be sanctioned for violation of the rules on the sale and registration of pre-need plans.

The four are Platinum Plans, Pryce Plans, AMA Plans and Primanila Plans.

The show-cause letters were already sent to the four companies and the SEC is now awaiting their reply prior to imposing any sanctions against them.

Platinum Plans sought a moratorium last month on the payment of its debts due to liquidity problems. The pre-need firm said 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 Plans said it could settle only up to P75 million of its maturing obligations to planholders. The pre-need firm intends to sell assets to raise funds to cover obligations to planholders.

The SEC has received several 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 Plans 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. It was also found to have failed to remit monthly deposits to its trust fund in violation of the rules of pre-need firms.

The SEC is closely monitoring pre-need firms that offered open-ended educational plans in light of reports that some of them are experiencing liquidity problems.

Following the collapse of Pacific Plans, the SEC has stepped up its monitoring of pre-need plan firms to ensure their compliance with existing regulations. For one, the SEC is now conducting on-site audits on pre-need companies to confirm the veracity of financial information submitted to it (SEC) as part of additional measures to safeguard the interests of the investing public.

Some lawmakers, however, are blaming the SEC for being remiss in its duty to monitor and supervise the industry, now plagued with controversies arising from the financial difficulties facing pre-need firms.

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