MANILA – The Securities and Exchange Commission (SEC) has revoked the license of Cashtrees Lending Corporation for launching and operating unregistered online lending platforms (OLPs) amid a moratorium imposed by the commission.
In an order dated March 16, the SEC Corporate Governance and Finance Department (CGFD) found that Cashtrees committed eight violations of SEC Memorandum Circular No. 10, series of 2021, which provides for the Moratorium of New Online Lending Platforms (SEC MC 10).
Cashtrees also committed eight violations of SEC Memorandum Circular No. 19, series of 2019 (SEC MC 19), which provides the disclosure requirements on advertisements of financing companies and lending companies and reporting of online lending platforms.
The findings were supported by the results of the joint operation of the SEC Enforcement and Investor Protection Department (EIPD) and the Philippine National Police Anti-Cybercrime Group on February 12 for the implementation of a warrant to search, seize, and examine computer data against Cashtrees.
In its report following the operation, the EIPD found Cashtrees to have launched and operated eight unrecorded OLPs, namely Rush Loan, Easy Money, Good Pocket, Lucky Start, Swipe Cash, 365 Cash, Mega Loan, and Gold Peso, after the moratorium on new OLPs took effect on Nov. 2, 2021.
The SEC imposed the moratorium in response to the emergence of financial technology companies engaging in predatory lending, taking advantage of cash-strapped Filipinos in need of quick loans by charging high interest rates and imposing strict payment terms.
“To date, the commission has not lifted the moratorium imposed above. Thus, only those OLPs previously approved by the commission may operate,” the CGFD said in the order.
In launching and operating the eight OLPs, the CGFD said, Cashtrees also violated SEC MC 19, which requires lending and financing companies to report their OLPs to the commission prior to their launch and operation.
Lending companies must also disclose in their advertisements and OLPs specific information, such as their corporate names, SEC registration numbers, and certificates of authority.
SEC MC 19 further requires companies to register their OLPs as business or trade names, and to report any OLP which they plan to develop, operate, or utilize no later than 10 days before their launch.
“To date, however, (Cashtrees) has not submitted any such report and, despite such failure, commenced operations of the said OLPs nonetheless,” the CGFD said.
Meanwhile, the CGFD also discovered lapses in Cashtrees’ compliance with SEC MC 19 with regards to its three recorded OLPs, namely Happylend, Credit Cash, and Cashmore.
The CGFD found that Happylend did not show the required disclosures under SEC MC 19, and that the three OLPs were not recorded as business or trade names of the company, among other violations.
“Due to the multiple violations of SEC MC 19 and SEC MC 10 committed by (Cashtrees) in launching the eight unrecorded OLPs and due to the additional violations of SEC MC 19 committed by (Cashtrees) in its failure to comply with regard to its three recorded OLPs, (Cashtrees) showed its wanton disregard of the commission’s rules and regulations,” the revocation order read.
“As the online lending industry is strictly regulated, companies who are either unwilling or unable to comply with the rules imposed cannot be allowed to continue to operate,” it added.
The revocation of Cashtrees’ CA brings to 37 the total number of financing/lending companies with cancelled licenses due to various violations of SEC rules and regulations.
To date, the SEC has also revoked the primary registration of a total of 2,082 lending companies for their failure to secure the requisite secondary license –a certificate of authority to operate as a lending/financing company– pursuant to Republic Act 9474, or the Lending Company Regulation Act of 2007 and for other violations.
The commission also ordered 72 online lending applications to cease operations for lack of authority to operate as a lending or financing company last year. (PR)