SEC’s Cease-And-Desist Order vs Skymart, Withu, Spendcash Now Permanent
Skymart, Withu, and Spendcash are all online lending operators and were banned by the Commission through the CDO last February 10, 2022.
The Securities and Exchange Commission (SEC) En Banc denied the motions filed separately by Skymart, Withu, and Spendcash to lift the Cease-and-Desist Order (CDO) released by the Commission for lack of merit. Making the CDO permanent.
“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,” the statement read.
Skymart, Withu, and Spendcash are all online lending operators and were banned by the Commission through the CDO last February 10, 2022.
According to Republic Act No. 9474, known as the Lending Company Regulation Act of 2007 (LCRA), persons or entities that wants to operate as lending companies are required to register as corporations and must secure the necessary permit to operate from the SEC.
“The 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 CDO stressed.
The SEC also found out that aside from the three lending operators not registered to the Commission, the entities also impose “onerous and unreasonable” terms, charge high interests to the debtors, and do acts that violate the right to privacy of their borrowers.
“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 CDO added.
In addition, the resolution of the Commission En Banc emphasized that the said online lending companies failed to comply with SEC Memorandum Circular 19, Series of 2019.
The memorandum requires lending and financing companies to regularly report all their existing online lending platforms to the Commission.
“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,” SEC concluded.
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