SEC closes three online lenders

THE SECURITIES and Exchange Commission (SEC) has issued a permanent cease and desist order against online lending operators Skymart, Withu and Spendcash for violating the law governing lending companies.

The SEC said Wednesday that it had denied the three entities’ respective motions to lift the shutdown order dated Feb. 10 as lacking in merit.

The order was issued after the commission found that the three entities were engaging in lending and financing activities without obtaining the necessary licenses from the SEC.

The regulator said the three lending operators violated relevant regulations such as the requirement for registered lending and finance companies to disclose and report their online lending platforms to the SEC.

Republic Act No. 9474 or the Loan Company Regulation Act of 2007 (LCRA) requires persons or entities operating loan companies to register them as corporations and obtain the necessary SEC authorization to operate.

“[T]The commission believes that the continued operation of online lending operators constitutes a clear violation of, and should be sanctioned in accordance with the [LCRA] because it engages in or engages in lending activity without the required authorization from the commission,” reads the cease and desist order.

The commission further stated that the acts of unregistered online lending operators of illegally offering and providing loans to the public at high interest rates, subjects debtors to unfair treatment “through a abusive and even defamatory language in the collection of the amount lent”.

Online lending operators have also been found to impose onerous and unreasonable terms, charge high interest rates and commit acts that violate the privacy rights of their borrowers.

“In its resolution to declare the [order] standing, the Commission En Banc noted that the registered companies purporting to operate the three loan companies failed to comply with SEC Memorandum Circular No. 19, Series of 2019, which requires loan and finance companies to report all their existing online lending platforms,” the commission said in the press release.

The SEC has a list of approved loan and finance companies and their registration status, available in the Loan and finance companies corner of its website. — Justine Irish D. Tabile

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