The Philippine Stock Exchange (PSE) has penalized 55 or 83 percent of its 66 active trading participants for violation of various trading rules and code of ethics for traders and salesmen.

The violations were found following the annual regulatory audit of brokers for 2009 by the PSE’S Market Regulation Division (MRD) and posted at the PSE website after being affirmed by the Market Integrity Board (MIB).

Only 11 brokers were listed as have been fully compliant with rules as of August 14, 2009: Asiasec Equities, BPI Securities Corporation, Cualoping Securities Corporation, Globalinks Securities & Stocks, H.E. Bennett Securities, Optimum Securities Corporation, Philippine Equity Partners Securities, RCBC Securities, SB Equities, Solar Securities, and Tri-State Securities.

The MRD noted that the period to appeal the audit findings to the MIB has lapsed without any trading participant filing an appeal although some brokers are reported to be planning to appeal these findings before the Securities and Exchange Commission.

Among rules violated included failure to segregate functions (Chinese Walls) such as an accounting head who also functioned as the settlement head and improper flagging of transactions of affiliated persons.

Other ethics violations include some officers maintaining joint accounts with their relatives.

There were also violations of the Securities Regulation Code such as failure to recognize monthly unrealized gains or losses on marketable securities in their system generated trial balance as well as the improper flagging of transactions for the account of officers or salesmen of the brokerage.

There were also violations on the trading on PSE shares as well as proxy forms bearing different signatures of clients when compared to the signature in the customer’s account information form.

Erring brokerages were slapped fines ranging from P5,000 to P50,000 and were directed to immediately comply with securities laws and PSE rules.