Investor's Corner: How to File a Complaint Againts Brokerage Firm or Trading Participants?

What does an investor do when a problem arises with his brokerage firm or trading participants?

As an investor, why should you file a complaint?

An investor may file a complaint if he or she thinks that a brokerage firm or trading participant has:

• Violated securities laws and rules.
• Been negligent in handling the client's account.
• Not duly accommodated the client's request and/or inquiries.
• Committed fraud and/or other questionable acts.

You, as an investor, may also contact the brokerage firm.

​The brokerage firm may be first informed of the complaint by the investor. The investor may also request an explanation for any transaction that they do not understand or have not given their consent to.

If the investor is not pleased with the trading participant's initial response, he or she may speak with the associated person and/or the compliance officer of the brokerage firm, among other authorized representatives. Given that the data could be used in an investigation, the investor is allowed to keep copies of correspondences with the brokerage firm.

​What if you are not satisfied with their (the brokerage firm's or trading participants) response? What should you do?

You can contact Capital Markets Integrity Corporation (CMIC).

What is CMIC? What are its roles?

CMIC is a self-regulatory body entrusted with conducting audits, surveillance, and compliance monitoring of market participants' operations. CMIC serves as the independent regulatory arm of the Philippine Stock Exchange (PSE).

CMIC's primary mandate is to maintain the integrity of the market and minimize the risk to the investing public by ensuring that the Trading Participants (TPs) adhere to all pertinent rules, regulations, and codes of conduct of CMIC and the Exchange, as well as all related legislative and regulatory requirements.

What can CMIC do?

The CMIC looks into complaints against brokerage companies, including their officials and staff, for potential violations of the laws and regulations governing securities. These complaints are typically made by clients or consumers of brokerage companies.

If anonymous complaints or referrals have enough information or leads, CMIC may also take action.

Following a probe, CMIC might:

• enforce sanctions on brokerage businesses, includes their executives and personnel; or
• send complaints to the Securities and Exchange Commission (SEC) and/or the Philippine Stock Exchange Exchange (PSE) for potential future action prosecution for offenses or things that are which fall beyond of CMIC's purview.

Can CMIC order a brokerage firm to pay an investor compensation or award damages in the investor's favor?

​​Neither can CMIC award an investor damages nor require a brokerage firm to pay the investor compensation. Only the sanctions permitted and constrained by the rules may be imposed by CMIC. A written reprimand, penalties, suspensions, and takeovers are a few examples of these.

The investor must file a case before the proper courts for damages and other related proceedings.

Can an investor contact CMIC for legal advice?

The steps for registering a complaint against a trading participant and the results of doing so can be explained to the investor by CMIC. However, after receiving a complaint, CMIC is unable to represent the client because it is the one conducting the investigation and must, thus, maintain objectivity.

However, the investor is free to hire legal counsel or consult with one.​

​What are the investigation procedures?

Substantially, the following are the procedures implemented when a complaint is filed with CMIC:

1. CMIC will assess if the complaint warrants the conduct of an investigation.
2. If the complaint justifies an investigation, CMIC will send a show cause letter to the brokerage firm, which will have ten (10) trading days to file its written explanation.
3. Upon receipt of the written explanation, the complainant must reply within five trading days from the notice. Failure to respond by the complainant may lead to the dismissal of the case.
4. After receipt of the complainant’s reply, the brokerage firm may file a rejoinder to the said reply within five trading days of notice.
5. Upon receipt of the rejoinder to the reply, CMIC may request that the complainant comment on the rejoinder within five trading days from notice.
​
Note: Filing an official investor complaint triggers an administrative case against the brokerage firm and will necessarily require the client’s cooperation throughout the investigation.

6. Upon receipt of the submissions by the parties, CMIC may:

a. hold an informal hearing
b. request a special audit of the brokerage firm
c. immediately proceed with the resolution of the case
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7. Depending on the resolution of the case, both parties have the option to appeal the resolution to the CMIC Board of Directors within ten (10) trading days from the receipt of the resolution.

​How do I contact CMIC?

• You can send an email to [email protected] and [email protected]
• You can also call them at (+63)8876-4580

Reminder: Contacting the brokerage firm first is not a prerequisite for contacting or filing a complaint with CMIC. If the investor, after due assessment, believes that he or she should immediately notify or file a complaint with CMIC, he or she may do so.

​How to submit a Complaint Form to CMIC?

Should the investor decide to file a formal complaint with CMIC, he or she should file an official complaint form. To download the complete list of complaint forms, visit https://www.cmic.com.ph/main/forms.html

Any complaint or referral to CMIC for investigation and/or resolution should be in writing and should state the particulars of the complaint or referral. The complaint or referral may be sent to CMIC through any of the following means:

Official Website: https://www.cmic.com.ph/
Personal delivery or registered mail: 10th Flr. Philippine Stock Exchange Tower, 5th Avenue corner 28th Street, Bonifacio Global City, Taguig City
Emails: [email protected] | [email protected]

It must be emphasized that as a general rule, the investor has to file a complaint with CMIC within six (6) months from knowledge of the commission of the alleged illegal and/or negligent act.