SEC permanently halts operations of 3 online lenders

The Securities and Exchange Commission (SEC) said on Wednesday it had made permanent its cease and desist (CDO) order against online lending operators Skymart, Withu and Spendcash.

In separate resolutions dated July 26, the agency denied respective motions filed by Skymart, Withu and Spendcash to lift the cease and desist order dated February 10 as lacking in merit.

The SEC issued the order after finding that the three entities engaged in lending and financing activities without obtaining the necessary licenses from the SEC. The regulator added that these companies violated several regulations such as the requirement for registered lending and finance companies to disclose and report their online lending platforms to the SEC. The companies have also been accused of ignoring the ban on abusive debt collection practices.

Republic Act 9474 (Lending Company Regulation Act of 2007) requires persons or entities operating as loan companies to register as corporations and obtain the necessary authorization from the SEC to operate.

“[T]The Commission considers that the continuation of the activities of online lending operators constitutes a flagrant violation and must be sanctioned in accordance with [RA  9474] because it engages in or carries on any lending activity without the license required by the Commission,” according to the SEC order.

“The acts of unregistered online lending operators in illegally offering and providing loans to the public, charging high interest rates and subjecting its debtors to unfair treatment through abusive and even defamatory language in the collection of amount lent.”

The SEC also found that online lenders imposed onerous and unreasonable terms, charged high interest rates and performed acts that violated their borrowers’ right to privacy.

In its resolution to declare the CDO permanent, the SEC noted that registered companies purporting to operate the three loan companies failed to comply with SEC Memorandum Circular 19 (2019 series), which requires loan companies and financing to declare all their existing online lending platforms. .

Registration for online lending platforms was not completed until eight days after the CDO was issued and months after the registration deadline expired.

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