The Securities and Exchange Commission (SEC) is strengthening its enforcement efforts through a whistleblower protection program that safeguards individuals who report against investment scams, predatory lending practices, money laundering, terrorist financing, market abuse, disclosure violations and other illegal acts.
The agency issued for public comment the draft memorandum circular providing guidelines on whistleblower protection.
‘Financial consumers, investors and corporate insiders all play a vital role in safeguarding the integrity of our financial and corporate sectors. Their willingness to expose wrongdoings forms part of our defense against fraud, market abuse, failures in disclosure, and other illegal acts,’ SEC Chairman Francis E. Lim said.
‘Through the issuance of these whistleblower protection guidelines, we seek to empower victims, market participants, and concerned citizens to come forward without fear, report violations of corporate and securities laws, from scams to complex misconduct such as insider trading and failures to disclose beneficial ownership, and join us in our fight against illicit activities that harm financial consumers and erode confidence in our markets.’
A whistleblower is any person who provides truthful information relating to a reportable act or omission to the SEC.
Reportable acts or omissions cover any offense or violation under Republic Act 11232, or the Revised Corporation Code, including the unauthorized use of corporate name; violation of the disqualification provision for directors; willful certification of incomplete, false, or misleading statements or reports; and fraudulent conduct of business, among others.
Whistleblowers can report not only obvious scams, but also highly sophisticated violations such as insider trading, market manipulation and failure to disclose accurate beneficial ownership information.
The draft guidelines ensure that whistleblowers are protected from retaliation, while providing clear and accessible ways to file reports with the commission.
A whistleblower may lodge a report through designated channels, including the Whistleblowing Portal that will be created on the SEC website.
The portal will collect the relevant information to generate a comprehensive report, which will include a description of the suspected wrongdoing; timing of the wrongdoing; impact or potential impact on the public interest; specific location where the wrongdoing has occurred; names of individuals involved; knowledge of others regarding the wrongdoing; prior reporting attempts and their outcomes; and any attempt to cover up the wrongdoing.
Reports may also be filed through the chatbot on the SEC website, by email, by phone, or through the SEC Check App, the commission’s official mobile app.
The public may also file such reports by mail or in person at the SEC Headquarters in Makati City or at any of the 15 extension offices across the country.
The SEC will process anonymous reports or complaints only if the information provided pertains to verifiable leads through other means like checking of corporate records, in which case, the subject of such reports or complaints may be required to provide a comment.
Anonymous reports should clearly identify the respondents by disclosing the corporation’s corporate name and address. Furthermore, the alleged violations, actions and/or omissions must be clearly identified, together with the law, rule and regulations allegedly violated.
A whistleblower who files a report anonymously may choose to provide a manner by which he or she can be contacted, which the SEC shall keep confidential in accordance with the law.
The draft guidelines provide the designation of a Whistleblowing Office, which shall take charge of receiving and managing whistleblowing reports and overseeing the implementation of whistleblower protection measures.