The Securities and Exchange Commission (SEC) has revoked Cashtrees Lending Corporation’s license to launch and operate unregistered online lending platforms (OLPs) despite a Commission-imposed moratorium.
In an order, the SEC’s Corporate Governance and Finance Department (CGFD) found that Cashtrees had committed eight violations of SEC Memorandum Circular No. 10, Series of 2021, which provides for the moratorium on the new online lending platforms (SEC MC 10).
Cashtrees also committed eight violations of SEC Memorandum Circular No. 19, Series of 2019 (SEC MC 19), which provides disclosure requirements on finance company and loan company advertisements and platform reporting. loan online.
The findings were supported by the results of the joint operation by the SEC’s Enforcement and Investor Protection Department (EIPD) and the Philippine National Police’s Cybercrime Enforcement Unit on 12 February for the implementation of a warrant for the search, seizure and examination of computer data. against Cashtrees.
In its report following the operation, the SIFT found that Cashtrees launched and operated eight unregistered PLOs, namely Rush Loan, Easy Money, Good Pocket, Lucky Start, Swipe Cash, 365 Cash, Mega Loan and Gold Peso, after the moratorium on new PLOs entered into force on November 2, 2021.
The SEC imposed the moratorium in response to the emergence of fintech companies engaging in predatory lending, taking advantage of cash-strapped Filipinos who need quick loans by charging high interest rates and imposing strict payment terms.
“To date, the Commission has not lifted the moratorium imposed above. Thus, only PLOs previously approved by the Commission can operate,” the CGFD noted in the decree.
By launching and operating the eight PLOs, CGFD said, Cashtrees also violated SEC MC 19, which requires lending and finance companies to report their PLOs to the Commission before launching and operating.
Loan companies must also disclose in their advertisements and PLO-specific information, such as their corporate names, SEC registration numbers, and certificates of authority.
SEC MC 19 further requires companies to register their PLOs as trade or business names and report any PLOs they plan to develop, operate or use no later than 10 days prior to their launch.
“To date, however, [Cashtrees] did not submit any such report and, despite this failure, nevertheless commenced the exploitation of the said PLOs,” according to the CGFD.
Meanwhile, the CGFD also discovered deficiencies in Cashtrees’ compliance with SEC MC 19 with respect to its three registered PLOs, namely Happylend, Credit Cash and Cashmore.
The CGFD found that Happylend had failed to show the information required under SEC MC 19 and that the three PLOs had not been registered as business or trade names of the company, among other violations.
“Due to multiple violations of SEC MC 19 and SEC MC 10 committed by [Cashtrees] in the launch of the eight unregistered PLOs and due to additional violations of SEC MC 19 committed by [Cashtrees] in its non-compliance with its three registered PLOs, [Cashtrees] has shown complete disregard for the rules and regulations of the Commission,” reads the revocation order.
He added that “as the online lending industry is tightly regulated, businesses that are unwilling or unable to comply with the imposed rules cannot be allowed to continue operating.” The revocation of Cashtrees CA brings to 37 the total number of finance/loan companies whose licenses have been revoked due to various violations of SEC rules and regulations.
To date, the SEC has also revoked the primary registration of a total of 2,082 loan companies for their failure to obtain the required secondary license – a certificate of authorization to operate as a loan/finance company.
The Commission also ordered 72 online lending apps to cease operations for failing to be licensed to operate as lending or finance companies last year.
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