I was in the middle of researching R&L Investments Inc stock scam when I bumped into an article written by News Front Philippines. The article was well-written that I’m just going to go with their story.
The article has a title The Life Of A “Moron”: A Closer Look At The Man Who Fooled The PSE And Its Auditors. Here is the link:
According to various sources, the scam was discovered in the days leading up to the long All Saints’ Day weekend when the company was found to be short of P3 million worth of stocks at the end of the trading day.
As the hours progressed, and amid a mad scramble to borrow shares to cover this shortfall, it was gradually discovered that the value of missing stocks had ballooned to P300 million, and eventually to almost its entire inventory after a more thorough internal audit.
The scam remained undetected over the years because the settlement clerk was the same person who was in charge of preparing the daily stock position reports for the owners. Moron, who was confronted by R&L Investments’ owners on Nov. 1, said he had started stealing from the firm in small amounts eight years ago, transferring the shares to another account under the name of one Julieta Sulapas with another stockbroker, Venture Securities.
From there, 3 percent was paid to Sulapas’ account with Union Bank of the Philippines, and the balance being transferred back to Moron for his disposal.
Moron was charged with qualified theft but has recently been released on bail.
I looked around and found one post that got my interest. It was a post/comment sa reddit by Bullsheets.
The comment goes like this:
There’s only one way he was able to do all of this, through EQ Trade in PDC system, eCs. To anyone wondering how EQ trade works,
- This is what brokerages do when a client wants to transfer his/her shares to another brokerage which he/she also maintains an account.
- It’s not free, both brokerages the original and receiving broker will charge the client.
- It requires EQ Trade form or request letter hard copy usually, specifically requesting a transfer of shares sent by the client to both R&L and Venture.
- R&L and Venture’s settlement department will confirm this to the client, and to the trader in charge of her account (There is an assigned trader to her since both R&L and Venture are traditional brokerages – broker-assisted service).
- The EQ trade itself requires two person to verify and confirm the transfer. sa eCs, there are two users: administrator and authorizer. Ang authorizer usually, officer yan or head ng operations or settlement department. (this is for checks and balances).
This is what I think he did Julieta is a real person, someone he really knows which he instructed to open an account on both R&L and Venture for the sole purpose of being his accomplice. Since he works in the settlement department, he initiated the EQ Trade on his own, by-passed the rule of presenting EQ trade form/authorization letter from the client OR forged it and approved the transaction.
Note: in PCD system, aggregated yung positions ng mga clients ng brokerages so nakapangalan sa brokerage yung shares hindi sa client (technical term for this is “street name”). Sa backroom system ng brokerage dun nakarecord kung sino talaga beneficial owners ng shares.
This is how I think it was undetected:
1.Siya ang both administrator and authorizer sa eCs. Heck I even think siya lang in-charge for the entire settlement department.
2. The Associated Person or Compliance Officer did not oversee the transaction.
3. The nominee or owners did not know because their approvals were not needed for the EQ Trade.
4.The backroom system they are using can be edited manually. Meaning, pwede niya i-tamper yung positions ng mga clients nila. He tampered the stock positions in their backroom system, made it appear na may position pa sila (which was mentioned in the Inquirer report na he was in charge of preparing the daily stock positions) on a certain stocks kahit wala na dahil nai-transfer na pala sa Venture.
5.There was no OUT receipt hence other departments were not alarmed. There will only be an OUT receipt when the client requested an Upliftment (electronic shares converted to stock certificates) and if there was an EQ Trade. Since he was doing shady shit, he did not make and print out the OUT receipts. (OUT receipts should have been automatically generated if they are using a backroom system that cannot be edited manually).
6. The CMIC, internal and external auditors were unable to detect this because he falsified the audit reconciliation report. (pag balanse ng positions nila sa backroom system and PCD. technically dapat hindi na sila balance pero in this case it is highly likely na dinaya din niya yung nasa backroom system nila)
7. THE OWNERS WERE A FOOL FOR CUTTING EXPENSES BY NOT HIRING ANOTHER PERSON HENCE THERE WAS AN OVERLAPPING OF JOB RESPONSIBILITIES.
8. Either they only have an AP on paper or the AP was just really lax.
Nakakapagtaka na Venture was not alarmed na ginawa silang ATM ni Julieta. They are the receiving broker, sakanila ipinapaliquidate yung shares, they should have known something is cookin’.
This Marlon Moron is not a Moron. He is an evil genius. He was able to fool his bosses, the regulatory body CMIC, external auditors, internal auditors, his colleagues, his office mates. But he did not act alone, he had other accomplices other than Julieta. But he is a Moron now for being caught.
If you read this far, choose your broker wisely. Go to a reputable brokerage firm.
Interesting ang point of view ng reddit poster.
Three things lang I would like to point out.
Let us step back a little bit. Hayaan muna natin ang scam.
- Let’s say na isa kang Investor na nilagay mo ang pera mo sa R&L Investments Inc. Wala kang ka ideideya na wala na pala ang pera mo just like that. Although given na sinabe naman ng R&L Investments Inc na ibabalik nila ang pera ng mga clients nila but yung point na it could disappear just like that.
- Second thing is yung CMIC. CMIC is an independent arm of PSE tasked to investigate and resolve violations by trading participants, as enforced by Republic Act No. 8799. This includes tracking unusual trading activities, such as Moron’s stealing of shares. The fact na nakalusot ito under CMIC’c watchful eye is mind-boggling.
- Lastly Venture Sec. If mahahalata ninyo mula sa CALATA at BW SCANDAL ay naririnig mo ang Venture sec. Hindi ko alam kung bakit. HAHA!
Kung babalikan natin mula Calata, BW Scandal at itong R&L Investments Inc parang may isang pattern nalumalabas. May mangyayareng anomalya or nakawan. May isang tao na aaminin or lalabas na masama. Sa kanya lahat ng sisi. Kakasuhan. Magbail. Few years dismiss ang kaso.
They were also running a story na na adik si Moron sa casino but parang hindi masyadong kinagat yung ganun na dahilan.
Sa lahat ng TL Family ko I hope yung mga kwento na ito ay magsilbing aral sa inyo na magstick kayo sa system or sa strategy ninyo kasi kahit anong ganda minsan ng growth or potential growth ng company (stock) na pinaglalagyan mo ng pera eh marami pang factors na hindi mo nafo-foresee or factors na wala kang ka alam alam.
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