THE SECURITIES and Exchange Commission (SEC) is further strengthening its enforcement efforts against illegal acts. These include investment scams, predatory lending practices, money laundering, terrorist financing, market abuse, disclosure violations and others.
This is through a whistleblower protection program that safeguards individuals who report such anomalies.
The SEC last Nov. 12 issued for public comment the draft memorandum circular providing guidelines on whistleblower protection. This is as part of its contribution to corporate integrity and the country’s broader anti-corruption and transparency efforts under the United Nations Convention against Corruption. The move is also in coordination with initiatives of the Department of Finance.
Financial consumers, investors, and corporate insiders all play a vital role in safeguarding the integrity of our financial and corporate sectors. Their willingness to expose wrongdoings forms part of our defense against fraud, market abuse, failures in disclosure, and other illegal acts,” SEC chair Francis Lim said in a statement.
“Through the issuance of these whistleblower protection guidelines, we seek to empower victims, market participants, and concerned citizens to come forward without fear, report violations of corporate and securities laws, from scams to complex misconduct such as insider trading and failures to disclose beneficial ownership, and join us in our fight against illicit activities that harm financial consumers and erode confidence in our markets,” Lim said.
The draft guidelines consider a whistleblower as any person who provides “truthful information” relating to a reportable act or omission to the SEC.
Reportable acts or omissions cover any offense or violation under the Revised Corporation Code. These include the unauthorized use of corporate name; violation of the disqualification provision for directors; willful certification of incomplete, false, or misleading statements or reports; and fraudulent conduct of business, among others.
Whistleblower protection and filing of reports
Whistleblowers may also report on other laws and regulations implemented by the SEC. These include the Securities Regulation Code; Financial Products and Services Consumer Protection Act; and Lending Company Regulation Act of 2007, among others.
This means whistleblowers can report not only obvious scams, but also highly sophisticated violations. Examples are insider trading, market manipulation and failure to disclose accurate beneficial ownership information.
The draft guidelines primarily ensure that whistleblowers are protected from retaliation while providing clear and accessible ways to file reports with the SEC.
A whistleblower may lodge a report through designated channels. These include the Whistleblowing Portal that will be created on the SEC website.
The SEC will process anonymous reports or complaints only if the information provided pertains to verifiable leads through other means. For example, by checking corporate records. In such a case, the subject of such reports or complaints may be required to provide a comment.
Anonymous reports should clearly identify the respondents by disclosing the corporation’s corporate name and address. Further, the alleged violations, actions, and/or omissions must be clearly identified, together with the law, rule, and regulations allegedly violated.
A whistleblower who files a report anonymously may choose to provide a manner by which he or she can be contacted. The SEC shall keep this confidential in accordance with the law.
Whistleblowing office
The draft guidelines provide the designation of a Whistleblowing Office. It shall take charge of receiving and managing whistleblowing reports and overseeing the implementation of whistleblower protection measures.
The SEC will also implement measures to protect whistleblowers from retaliation or adverse actions. This includes ensuring job security and providing support mechanisms.
Anti-retaliation measures may also include prohibitions on dismissal or demotion. The Commission could also provide counseling or legal assistance. (Philippine Daily Inquirer)
