Wednesday, June 3, 2009

SEC transfer to DTI questioned

It's unfortunate that the Secruties and Exchange Commission (SEC) has been transferred under the supervision of the Department of Trade and Industry (DTI). Malacanang must have toying the idea of initiating this move until lately when SEC appeared to have absconded in its regulatlory powers to carefully check on the performance of pre-need companies where millions of policyholders had been duped. SEC used to be under the supervision of the Department of Finance (DoF) a line departmental agency that oversees the activities of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC), both tax collecting agencies of the government that are under close scrutiny by the people.

The move initiated by the president was timely even to the extent of defeating the real objective of regulating the capital markets in the Philippines. However, many observers have doubts in their minds as to the real motive of the SEC going into the folds of the DTI. Besides, putting the regulatory powers of SEC under the DTI can be misconstrued as another way of crippling the former's quasi-judicial functions, which could be under question considering that at any time, the DTI higher ups will always have a hand in any decision made by the SEC commission en banc on issues that have something to do with investments. As the populat saying goes: "Too many cooks may spoil the broth."

Now, it will be hard to fathom as to the depth of the problem that hounds SEC at this point in time. And the very people who are feeling the impacts of the SEC's mishandling of the pre-need companies that went on rough waters, especially the billions of funds invested by the millions of policyholders, are the ones who could tell if it was really right to put it under DTI's control and supervision. It is not clear at this time, however, if the SEC's en banc commission would be vulnerable to undue interference from DTI higher ups, should sensitive decisions on matters related to investments and capital markets are taken for deliberation and approval. That's a big question that now hounds the minds of those who feel that SEC should have left alone as an autonomous constitutional organization.

Rather than transferring it to DTI control, reforms should have been instituted at the very core of where SEC has messed up. If there was an urgent need to overhaul some of its functions, so be it, if only to deliver the quality expectations of the people. But rather than resort to this, the administration has diverted the route. Many still believed that the Department of Finance is the right government body where the SEC should belong to. SEC was only caught in the middle of a global financial maelstrom, where some of the pre-need companies must have poured in vast amount of money for investments but got the deepest shock when everything turned out disadvantageous to their interest.

I doubt it very much if putting SEC under the control of any department of government will do much to impose tough regulations in the country's capital markets. For as long as there are public officials who can be cowed or tempted to accept hefty sums of bribes to overturn a policy decision in favor of a shady business organization or individual, SEC is nothing but an inutile quasi-jucidial body that is expected to face more challenges ahead. It is hoped that SEC is expected to far exceed its performance now that it is under the supervision of the DTI, now alreadyoverburdened with a lot of things to do.

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