SEC EB Case No. 02-18-439SEC’S MARKETS & SECURITIES REGULATION DEPARTMENT DIRECTIVE FOR HSBC SECURITIES TO AMEND ITS ARTICLES OF INCORPORATION, Appellant, v. HSBC SECURITIES (PHILIPPINES), INC., Appellee.

Securities and Exchange Commission COMMISSION EN BANC Republic of the Philippines Department of Finance

IN THE MATTER OF:

SECURITIES COMMISSION'S SECURITIES DEPARTMENT HSBC SECURITIES TO AMEND ITS ARTICLES OF INCORPORATION AND DIRECTIVE MARKETS REGULATION EXCHANGE FOR &

SEC En Banc Case No. 02-18-439

HSBC SECURITIES (PHILIPPINES), INC.

X Appellant.

DECISION

Philippine Stock Exchange's (PSE) revocation of HSBC Securities license as a trading participant on 13 December 2017. Securities Regulation DepartmentMSRD which directed HSBC Securities to immediately amend its Articles of Incorporation (Aol) by changing its corporate name and excluding brokering as part of its activities. The Assailed Letters were issued by the MSRD as a consequence of the of the Letterscollectively,Assailed Letters) issued by the Markets and dated 27 February 2018 filed by HSBC Securities (Philippines), Inc.HSBC Securities) on 28 February 2018, seeking the nullification and setting aside Before the Commission is the Appeal Memorandum (the Appeal")

broker to amend its Aol under pain of revocation of its primary franchise. reversible error in issuing the Assailed Letters on the ground that the same provision in the Securities Regulation Code (SRC) that requires a dormant violated its right to due process considering that the Letter-Order dated 6 December 2017 of the PSE has not yet attained finality and that there is no In its Appeal, HSBC Securities maintained that the MSRD committed

RELEVANT FACTS

Participants and Trading Right Owners who have not been operating since 24 May 2012 or earlier to submit an undertaking that they will commence/resume Pursuant to its Memorandum dated 2 June 2017 requiring Trading

1 Dated 17 January 2018 and 13 February 2018.

In the Matter of: SEC's MSRD directive for HSBC Securities to Amend its Aol SEC En Banc Case No. 02-18-439 DECISION Page 2 of 4

its failure to comply and that involuntary revocation proceedings will brokerage operations and increase their unimpaired capital to PhP100 Million, forthwith commence. the PSE issued a letter dated 20 October 2017 informing HSBC Securities of

Directors. HSBC Securities filed a Motion for Reconsideration with PSE. license of HSBC Securities as a Trading Participant and declared that its Trading Right has ipso facto become vacant and invested in the PSE Board of The PSE thereafter issued a letter dated 6December 2017 revoking the

brokering as part of its activities pursuant to Resolution No. 9, series of 2009 on 11 January 2018. (SEC Resolution No. 9) which was allegedly reaffirmed by the Commission letter dated 17 January 2017 (the January 2017 Letter directing HSBC Securities to amend its Aol by changing its corporate name and excluding During the pendency of the case before the PSE, the MSRD issued a

of SEC Resolution No. 9 until PSE has finally disposed of the pending incident. The MSRD denied the same in its 13 February 2018 letter. cancellation of the January 2017 Letter on the ground that the proceedings before the PSE are still on-going, and (b) the deferment of the implementation In its letter-reply, HSBC Securities moved for a the recall and

MSRD did not interpose any objection on the proposed amendments as HSBC Securities was no longer registered as a broker of securities. with the Company Registration and Monitoring Department (CRMD) to b the change of its principal address. In its letter dated 5 July 2019, the effect (@) the shortening of its corporate term until 30 September 2020; and On 25 July 2019,HSBC Securities filed an application to amend its Aol

its Comment on HSBC Securities' Appeal. On 10 June 2020, an Order was issued directing the MSRD to submit

MSRD posited that an inactive broker-dealer cannot hold itself out and latter had no more secondary license to engage as a broker or dealer of securities and it has suspended its operations since 31 December 2001.3 The given the opportunity to be heard and to explain its side through the it directed HSBC Securities to amend its Aol on the basis of the fact that the Letters did not violate HSBC Securities'right to due process as the latter was letters/communications that it filed with MSRD.The MSRD also argued that In its Comment, the MSRD maintained that its action in the Assailed

2 Paragraph 2 of the Motion to Withdraw (Re: Appeal Memorandum dated 27 February 2018) 3 Paragraph 15 of MSRD's Comment

In the Matter of:SEC's MSRD directive for HSBC Securities to Amend its Aol SEC En Banc Case No. 02-18-439 DECISION Page 3 of 4 represent to the public that it is a broker-dealer if it does not have a secondary license and the intention to engage in the said business.

its Aol which shortened HSBC Securitiescorporate term until 30 September 2020. On 2 August 2020, the Commission approved the application to amend

term is set to expire on 30 September 2020. filed by HSBC Securities praying that the Appeal be withdrawn as it is no longer interested in the resolution of the case considering that its corporate On 14 September 2020, a Motion To Withdraw Appeal (Motion) was

not interpose any objection on the Motion. In its Comment/Opposition to the Motion to Withdraw, the MSRD did

ISSUE

warranted. Whether the dismissal of the instant case on the basis of the Motion is

DECISION

the Motion and the dismissal of the instant case. The supervening events attendant in the instant case justify the grant of

its Comment, Section 3, Rule 51 of the 1997 Rules on Civil Procedure can be applied suppletorily.5 The said provision states that: do not contain a provision prohibiting parties to an existing case from withdrawing any pleading filed with it. However, considering that Appellant's Motion to Withdraw Appeal was filed after the MSRD has filed The 2016 Rules of Procedure (the 2016 Rules) of the Commission

court." (Emphasis supplied) as of right at any time before the filling of the Appellee's brief. Thereafter, the withdrawal may be allowed in the discretion of the SECTION 3.Withdrawal of appeal. An appeal may be withdrawn

Supreme Court in the case Central Luzon Drug Corporation vs CIR, thus: The consequence of the withdrawal of an appeal was explained by the

request for the issuance of a tax credit certificate in the amount of decision of the CTA. And since the CTA had already denied petitioner's "By withdrawing the appeal, petitioner is deemed to have accepted the

5 Section 1-6, Rule I, Part I of the 2016 SEC Rules of Procedure 4 Paragraph 16 of MSRD's Comment. 6 G.R. No. 181371, March 02, 2011

In the Matter of: SEC's MSRD directive for HSBC Securities to Amend its Aol SEC En Banc Case No. 02-18-439 DECISION Page 4 of 4

quo becoming final and executory." (Emphasis supplied) denial of its request for a tax credit by abandoning its appeal and filing a new claim. To reiterate, an appellant who withdraws his appeal x x must face the consequence of his withdrawal, such as the decision of the court a P32,170.409 for insufficiency of evidence, it may no longer be included in petitioner's future claims. Petitioner cannot be allowed to circumvent the

value- because the entity upon whom the directive to comply is addressed has already ceased to exist. Letters have been mooted by the expiration of its corporate term which warrants the dismissal of the instant case. Thus, any decision that the Commission will have on the instant case would provide no practical use or necessarily have the effect of abandoning the Appeal and mooting the instant on 30 September 2020 warrants the grant of the Motion. More importantly, HSBC Securities deemed acceptance of the directive of MSRD in the Assailed case.Consequently, the expiration of the corporate term of HSBC Securities Amended AoI warranted the filing of the Motion because the same will In the instant case, the filing of and the subsequent approval of the

hereby DISMISSED for having become moot and academic. is hereby GRANTED.The Appeal Memorandum dated 27 February 2018 is WHEREFORE,premises considered,the Motion to Withdraw Appeal

Pasay City, Philippines; 25 May 2021. SO ORDERED.

EMILIOB. AQUINO Chairperson VVV

EPHYROLUIS B.AMATONG Commissioner JAVEY PAUL D.FRANCISCO Commissioner

KEIMN Commissioner ILESTER K.LEE KARLQ $. BELLO Commissioner

7 Republic vs Moldex Realty, Inc., G.R. No. 171041, February 10, 2016