THE Securities and Exchange Commission (SEC) has made permanent its cease and desist order against online lending operators Skymart, Withu, and Spendcash.
In separate resolutions dated July 26, the Commission En Banc denied the respective motions filed by Skymart, Withu and Spendcash for the lifting of the cease and desist order dated February 10 for lack of merit.
The Commission En Banc issued the order after finding that the three entities have engaged in lending and financing activities without securing the necessary licenses from the SEC, and/or have violated relevant regulations such as the requirement for registered lending and financing companies to disclose and report their online lending platforms to the SEC, and the prohibition on abusive debt collection practices.
Republic Act No. 9474, or the Lending Company Regulation Act of 2007 (LCRA), requires persons or entities operating as lending companies to register 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 form the Commission,” the CDO read.
“The acts of the 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 libelous language in collecting the loaned amount.”
The SEC further found that the online lending operators have been imposing onerous and unreasonable terms, charging high interest rates, and performing acts that violate the right to privacy of their borrowers.
In its resolution to declare the CDO 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 registration for the online lending platforms were made only eight days after the CDO was issued and months after the deadline for such registration has lapsed.
The SEC regularly monitors lending and financing companies for their compliance with applicable laws, rules and regulations, as it seeks to protect borrowers from abusive, unethical, and illegal lenders.
