NextGen Day

MANILA – The Securities and Exchange Commission (SEC) has revoked Cashtrees Lending Corporation’s license to launch and operate unregistered online lending platforms (OLPs) in light of the commission’s moratorium on OLPs.

Cashtrees violated eight provisions of SEC Memorandum Circular No. 10, series of 2021, which prohibits the establishment of new online lending platforms, according to an order dated March 16. (SEC MC 10).

Cashtrees also violated eight sections of SEC Memorandum Circular No. 19, series of 2019 (SEC MC 19), which establishes disclosure requirements for financing and lending companies’ advertisements, as well as reporting requirements for online lending platforms.

The findings were corroborated by the SEC Enforcement and Investor Protection Department’s (EIPD) and Philippine National Police Anti-Cybercrime Group’s joint operation on February 12 to execute a warrant to search, seize, and examine computer data against Cashtrees.

Cashtrees 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, according to the EIPD’s report following the operation.

The SEC imposed the moratorium in response to the emergence of financial technology companies engaged in predatory lending, charging high-interest rates and imposing strict payment terms on cash-strapped Filipinos in need of quick loans.

“The commission has not yet lifted the moratorium imposed in the preceding paragraph. As a result, the CGFD stated in the order, “only those OLPs previously approved by the commission may operate.”

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, the CGFD stated.

Additionally, lending companies must disclose specific information in their advertisements and OLPs, such as their corporate names, SEC registration numbers, and certificates of authority.

Additionally, SEC MC 19 requires companies to register their OLPs as business or trade names and to notify the SEC 10 days prior to the launch of any OLP they intend to develop, operate, or utilize.

“However, to date, (Cashtrees) has failed to submit such a report and, despite this failure, has commenced operations of the said OLPs,” the CGFD stated.

Meanwhile, the CGFD discovered violations of SEC MC 19 regarding Cashtrees’ three recorded OLPs, namely Happylend, Credit Cash, and Cashmore.

The CGFD determined that Happylend failed to make required disclosures under SEC MC 19, and that the three OLPs were not properly registered as the company’s business or trade names, among other violations.

“By committing multiple violations of SEC MC 19 and SEC MC 10 in launching the eight unrecorded OLPs and by failing to comply with the commission’s rules and regulations with respect to its three recorded OLPs, (Cashtrees) demonstrated its willful disregard for the commission’s rules and regulations,” the revocation order read.

“Because the online lending industry is highly regulated, businesses that are unwilling or unable to adhere to the rules imposed cannot continue to operate,” the statement added.

With the cancellation of Cashtrees’ CA, the total number of financing/lending companies that have had their licenses revoked due to various violations of SEC rules and regulations now stands at 37.

The SEC has also revoked the primary registration of a total of 2,082 lending companies for failing to obtain the required secondary license – a certificate of authority to operate as a lending/financing company – in accordance with Republic Act 9474, or the Lending Company Regulation Act of 2007, as well as for other violations.

Last year, the commission also ordered the closure of 72 online lending applications for lack of authority to operate as a lending or financing company.

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