Leticia Tanael vs. Worldwide Monetary Market, Inc., et al.

[SEC-SICD * CASE NO. 12-95-5224. January 6, 1998.] LETICIA TANAEL , petitioner , vs . WORLDWIDE MONETARY MARKET, INC., ET AL. , respondents . D E C I S I O N Facts on record show that on October 23, 1995, petitioner Leticia Tanael entered into a contract with respondent Worldwide Monetary Market, Inc. (Worldwide) for spot/futures currency trading. prLL The petitioner herein and her husband were enticed to invest their hard-earned money amounting to ONE HUNDRED TWENTY SIX (P126,000.00) in respondent Worldwide through the insinuations of respondents Mar Anthony Magada and Joel Mendoza, who are not licensed investment consultants/brokers/agents (Exhibit "G"). Said respondents represented that if the spouses would invest in foreign currency, they will not suffer any loss, they will be given profitable income, the transactions shall be effected and monitored by the aforesaid respondents (TSN, October 98, 1996 p. 17); and that their investment can be withdrawn anytime (ibid., pp. 19-20). Fully convinced as to the truthfulness of said representations, the mentioned spouses decided to invest in Worldwide. In the process, petitioner signed a Special Power of Attorney in favor of Alexander E. Bulan, (Exhibit "B") a person not known to herein petitioner. She also signed other bulky blank set of papers consisting of one thick pad which she was not even able to read because she was repeatedly told by respondent Magada to simply sign the documents (TSN October 28, 1996 p. 56, 57 and 59). Thereafter, petitioner deposited the amount of P126,000.00 under Account No. KCC 8410 duly acknowledged by respondents per Margin Receipt No. 5663 dated October 23, 1995 (Exhibit "C"). A few days later, said account gained a profit or increase balance of SIX THOUSAND (P6,000.00) PESOS which was reported by respondent Magada. Prior to the actual collection of the profit gained, a disgusting incident transpired: respondent Magada demanded for his commission in the amount of FIVE HUNDRED (P500.00) PESOS, an act petitioner considered as unprofessional/unethical which prompted her to withdraw subject investment with respondent Worldwide (TSN pp. 29-30). Despite the receipt of the accomplished withdrawal slip and repeated oral requests for the return of subject investment, the check promised by respondent Magada was never released. Respondent Magada at times was evasive and when confronted by petitioner, he merely informed the latter that the check was not yet ready. On November 14, 1995 instead of receiving the expected check, petitioner received a notice of additional margin deposit in the amount of P96,346.58. (Exhibit "5"). Worst, the invested fund of petitioner dwindled to ONE THOUSAND NINE HUNDRED FIFTY-ONE & SEVENTEEN CENTAVOS (P1,951.17) as alleged in respondent's Answer dated February 29, 1996. On December 14, 1995, petitioner discovered that respondents Magada and Mendoza are not licensed commodity futures agents of Worldwide as can be gleaned from the Brokers and Exchange Department (BED) Certification dated December 14, 1995 (Exhibit "G"). Since petitioner had no more intention to put up additional investment and her request for withdrawal was seemingly ignored by respondents herein, petitioner availed of the services of a lawyer to protect her interest/claim thereby resulting in the filing of the instant case. In the petition dated December 18, 1995, petitioner prayed, among others, for the following: 1. Directing the cancellation/revocation of license as commodity futures commission merchant/broker/agent granted to Worldwide and its agents by virtue of SEC Order 206 s. 1995, and barring them from securing another in the future; 2. Declaring all transactions made with regard to the petitioner's account to be null and void, and ordering the return to the petitioner the amount of PHP 126,000.00 plus legal interest thereon from 7 November 1995, until full restitution has been made; 3. Directing respondents to pay petitioner the amount of P200,000.00 and 150,000.00 as and by way of moral and exemplary damages, respectively; prLL 4. Directing respondents to pay reasonable Attorney's fees in an amount not less than P100,000.00, for litigation expenses and costs of the suit . After a thorough and careful perusal of the circumstances surrounding the instant case, it indubitably appears that petitioner's claim is worthy of merit. This finding is further bolstered by respondents' failure to controvert the very factual foundation relating to the allegations of fraud and misrepresentation committed by the perpetrators of the same. The aforesaid undesirable acts paved the way for the financial losses suffered by the unsuspecting and inexperienced investors petitioner herein. Sad to state, petitioner ventured/invested in a complex commodity futures trading without clear understanding of the terms and conditions of the pro forma commodity futures contracts/customers agreement and other related documents, unmindful of the technical operations of the industry and the magnitude of risk to be hurdled. Petitioner was indeed enticed by the assurance of high income yield out of the commodities transactions and saccharine promotional words of futures agents/representatives of Worldwide. Respondent Worldwide, on the other hand, with manifest tolerance of the illegal and unauthorized activities of respondents Magada and Mendoza took advantage of the situation, traded the funds of the vulnerable investor. The same is true with respect to respondent Alexander Bulan. Worst, despite stop order or notice of withdrawal given by petitioner, respondents continuously traded/invested the funds until it almost reached a level to the damage and prejudice of herein petitioner. As culled from the foregoing discussions, respondents, through their concerted efforts, are guilty of fraud and misrepresentation. Moreover, respondents can be safely said to have violated Section 20 and 28 of the Revised Rules on Commodity Futures Trading which provide and we quote: SECTION 20. Licensing of person associated with futures commission merchants . It shall be unlawful for any person to be associated with any futures commission merchant as a partner, officer or employed (or any person occupying a similar status or performing similar functions) in any capacity which involves (a) the solicitation or acceptance of customers orders (other than in a clerical capacity) or (b) the supervision of any person or persons so engaged unless such person shall have been licensed/registered by the Commission and such license shall not have expired nor been suspended or revoked, and it shall be unlawful for any futures Commission merchant to knowingly permit such person to become or remain associated with him in such capacity. SECTION 28. Prohibitive Acts . It shall be unlawful for any person to engage in any futures transactions or solicit, accept orders, or acts as a condition without being duly authorized by either the SEC or the Commodity Futures Exchange under the existing rules". Parenthetically, WORLDWIDE MONETARY MARKET is one of the Commodity Futures brokers placed under liquidation per SEC Order dated October 9, 1997 due to the confirmed flagrant violations or the provisions of the RSA as well as the Rules of Commodity Futures, to mention a few: xxx xxx xxx 4. Customer's accounts are frequently traded for the purpose of generating commission resulting in the depletion of investment in most causes and in total loss of investment in some cases. 5. There is widespread employment of unlicensed salesmen enticing investors, who are usually their relatives and friends, which in most cases result in tremendous losses. Based on the foregoing considerations, the Commission hereby orders: 1. Declaring all the contracts/transactions entered into by and between the complainant and respondent Worldwide or its agents/representatives as null and void. LLpr 2. Respondents to return complainants investments in the total amount of ONE HUNDRED TWENTY SIX (P126,000.00) plus legal interest from November 7, 1995 until the full settlement of the subject amount. 3. Respondent to pay attorney's fees in the amount of not less than FIFTY (P50,000.00) THOUSAND PESOS. Furthermore, this Hearing Officer recommends for the institution of appropriate criminal actions by the Commission against the respondents for violation of SEC Revised Rules and Regulations on Commodity Futures Trading in relation to Section 7 and 56 of the Revised Securities Act (B.P. No. 178). Let copies of this Decision be furnished with the Brokers Exchange Department (BED), this Commission, and the duly designated liquidator pursuant to SEC Order of October 9, 1997 . SO ORDERED. (SGD.) ROSALINA TIVIDAD-TESORIO Hearing Officer