SEC Stops Individual from Operating Unauthorized Lending Business

​The Securities and Exchange Commission (SEC) has issued a cease and desist order (CDO) against an individual for operating a lending business without registration and necessary approval from the Commission.

In an order promulgated February 18, the Commission En Banc directed Fernando Joquico Santos, including his business operators, promoters, representatives, agents, and all persons acting on his behalf to stop promoting and facilitating lending transactions until they have incorporated and secured the necessary authority to operate as a lending or financing company.
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Santos and his agents were also ordered to stop from offering and advertising their lending business online or any other media, and to take down all the materials related to the promotion of the lending business.

SEC Commissioners Javey Paul D. Francisco, Karlo S. Bello, and McJill Bryant T. Fernandez voted in favor of the issuance of the CDO, while Commissioner Rogelio V. Quevedo abstained. SEC Chairperson Emilio B. Aquino was on official business.

The case stemmed from the request of the Office of the City Prosecutor of San Juan City to verify the legitimacy of Santos’ lending business, as he has filed several cases in the past two years against his clients/borrowers for issuing bounced checks as payment for the loans obtained from him.

Santos has allegedly been offering loans to the public ranging from P30,000 to P600,000 since 2018. He also hires agents or middlemen who are tasked to offer loans, monitor loan balances, and ensure the collection of the said loans, in exchange for commissions between 2% and 3% per loan transaction.

However, records from the SEC showed that Santos has not registered his business with the SEC and has been conducting lending activities without a certificate of authority from the Commission.

Republic Act No. 9474, or the Lending Company Regulation Act of 2007 (LCRA), provides that a lending company should be registered with SEC and is required to secure a certificate of authority from the Commission to lawfully operate as a lending business.

Section 12 of the LCRA further states that a person engaged in lending business without such authority may face a fine of P10,000 to P50,000, or imprisonment of six months to 10 years, or both.

“The high volume of lending transactions and the substantial amount of loans involved, undoubtedly reveals Mr. Santos’ intention to continuously engage in the business of lending for profit,” the order read.

“The foregoing clearly constitutes a clear violation of the LCRA which warrants the immediate issuance of a cease and desist order to immediately prevent an illegal act, and to protect the public from Mr. Santos’ fraudulent business activity i.e. misrepresenting to the public that he has the license to operate a lending business,” it added.