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SEC runs after ‘5-6’ lenders

The days of “five-six money lenders” lurking across the country are numbered as the Securities and Exchange Commission (SEC) began to take a closer look on actions it could possibly perform to bust entities engaged in the said illegal activity.

SEC said it has recently received reports that many individuals, particularly the “five-six money lenders,” are now engaged in the business of lending without authority to do so, thus violating the Lending Company Regulation Act of 2007.

In five-six, the lender, usually Indian nationals, charges interest as high as 20 percent. It simply states that when you borrow P5.00, you have to pay P6.00.

SEC logo (MB File Photo)

SEC logo (MB File Photo)

Under the Lending Company Regulation Act of 2007, it is illegal to act as a lending company or investor unless registered with the Commission as a lending company.

It specified that the Section 12 of the law provides that a fine of not less than P10,000 and not more than P50,000 or imprisonment of not less than six months but not more than 10 years or both, at the discretion of the court, shall be imposed upon informal lenders.

According to the country’s corporate regulatory watchdog, it will now strictly implement this law among lending firms and those that are illegally operating as one.

SEC is also now calling on the public to inform the agency if they know of an entity engaged in “five-six lending” or any form of informal lending.

Should you have any information regarding the individuals and entities engaging in lending business illegally, please call the SEC Corporate Governance and Finance Department at 818-5476 or 8185516

Last week, SEC also started to take severe measures against the proliferation of informal lenders, with at least 3,512 lending companies now on the risk of being suspended if they wouldn’t be able to comply with certain regulatory requirements.

SEC Chairperson Teresita Herbosa said the corporate regulatory agency has intensified its campaign against informal lenders or people who engage in lending without primary registration of incorporation and secondary license from the SEC.

As of now, she said there are more than R3 billion worth of loans from informal lenders going around the economy, which is just the same value of loans from legit Microfinance organizations.

“Because of the tough stance that the present administration under President Rodrigo Duterte has taken against informal lenders, the SEC has initiated investigation into the activities of suspected informal lenders for possible filing of criminal complaints,” Herbosa said in an interview with reporters.