In a move to fully enforce the prohibition against insider trading, the Securities and Exchange Commission (SEC) will seek authority from Congress to recover damages in behalf of losing investors and impose due penalties against the violators.

Teresita Herbosa, chairperson of the SEC told the Manila Times, that under the present Securities Regulation Code (SRC), the agency has no “disgorgement” power, similar to that granted by law to the courts of justice.

“Under the present SRA, the SEC has only the power over administrative cases, such that we can revoke licenses and/or file criminal charges when the act committed under the law constitutes a violation or an offense, but we do not have any disgorgement power,” Herbosa said.

‘Disgorgement’ is an action for repayment of wrongful gains that is imposed on violators by the courts. Conversely, the funds or profits that were received through illegal or unethical business transactions are disgorged, or paid back, with interest to aggrieved parties.

Hence, the government official said that there is indeed a pressing need to seek legal authority from Congress that would allow the agency to assume a more proactive role in the enforcement of the law that prohibits insider trading.

Herbosa said that once such power is granted by Congress, the agency will be able to recover the excess amount constituting wrongful gains from the insider trader, even though the aggrieved investors do not seek relief from the courts.



SEC seeks enforcement power on insider trading