August 31, 2022

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SEC shuts three online lenders

THE SECURITIES and Exchange Commission (SEC) 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 on Wednesday that it denied the respective motions of the three entities to lift the halt order dated Feb. 10 for lack of merit.

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

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

Republic Act No. 9474 or the Lending Company Regulation Act (LCRA) of 2007 requires persons or entities operating lending companies to register them as corporations and to secure from the SEC the necessary authority to operate.

“[T]he commission finds that the continued operation of the online lending operators constitutes a clear violation of, and should be penalized pursuant to the [LCRA] because it engages in or carries out a lending business without the required license from the commission,” the cease-and-desist order read.

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

The online lending operators were also found to have been imposing onerous and unreasonable terms, charging high interest rates, and performing acts violating their borrowers’ right to privacy.

“In its resolution to declare the [order] permanent, the Commission En Banc noted that the registered corporations supposedly operating the three lending companies failed to comply with SEC Memorandum Circular No. 19, Series of 2019, which requires lending and financing companies to report all their existing online lending platforms,” the commission stated in the press release.

The SEC has a list of licensed lending and financing companies and their registration status, available in the Lending and Financing Companies corner of its website. — Justine Irish D. Tabile