The Philippine securities regulator has instigated an investigation into how a settlements clerk with a gambling problem singlehandedly caused the collapse of one of the country’s oldest brokerage firms.
The employee of R&L investments — who has been named in some news reports as Marlon Moron – is accused of stealing more than $13.87 million worth of stocks from the company over eight years, resulting in its stock position being “almost wiped out.”
R&L shut down last Monday after 50 years of trading when it uncovered the scam and realized the extent of the damage.
Now regulators want to find out if other brokerage firms have been impacted. They believe it’s possible that Moron’s crimes could run into millions more.
According to the Philippine Daily Inquirer, the rogue clerk is currently in police custody and has confessed that a spiraling gambling habit caused him to begin stealing from his employer in or around 2011.
The scam involved surreptitiously siphoning shares from R&L’s stock inventory into a private account before selling them on for personal gain.
In a statement, the Philippines’ Securities and Exchange Commission said it would conduct a “a thorough investigation to unearth the truth behind the transactions in question, identify all parties involved, and uncover the extent of the damage to the stock brokerage, its clients and the overall market.”
“There should be a number of controls in place within the brokerage that should prevent something like this happening, especially over a long period of time,” SEC Commissioner Ephyro Amatong told PDI.
The company was given a clean bill of health at its most recent audit.
Over the weekend, the R&L’s owner, the Lee family, said it had filed a lawsuit against Moron — who it referred to as a longtime “trusted” employee — in the Mandaluyong City Court. It stressed that its obligations to its clients would be met up until October 31, 2019, which is when the fraudulent activity was discovered.
“At present, our priority is to dialogue and collaborate with the clients affected by Mr. Moron’s fraudulent activities, as well as to coordinate closely with the Philippine Stock Exchange and its regulatory organizations,” the company said in a statement.
R&L was conducting “a comprehensive and rigorous investigation to determine how Mr. Moron was able to intentionally and deliberately deceive our company, its auditors, and other regulators for such an extended period of time” and siphon off P765 million in clients’ stocks since 2011.”
It is currently unclear exactly how Moron lost the money. While it is forbidden for Filipinos to gamble via the country’s burgeoning online gaming sector, which primarily targets the Chinese market, opportunities to bet are numerous.
The country has an abundance of casinos, lottery and bingo outlets, as well municipal cockpit arenas and card games available on the city streets. A kind of numbers game called jeuteng is also widely popular despite being nominally illegal.