One of the oldest stock brokerage firms in the country ceased operations earlier this week after its owners uncovered a long-running scam by a “trusted employee” that resulted in almost the entire investors of clients’ shares held by the firm being wiped out.

The company—50-year-old R&L Investments Inc. based in Mandaluyong City, and a member of good standing of the Philippine Stock Exchange (PSE)—saw “over P700 million worth of its inventory of stocks” stolen by its settlement clerk, who was apprehended by police operatives and had since confessed to the crime, according to various market sources.

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The Inquirer obtained a copy of the letter of R&L Investments’ owner, Lucy Linda Lee, to PSE director Alejandro Yu narrating the details of the theft by the firm’s employee, Marlo Moron, who allegedly began dipping his hands into the firm’s stock inventory in small amounts in 2011—with the amounts gradually increasing as he was emboldened over the years.

“Almost all our stock position had been depleted,” Lee said in her report to the PSE where she also disclosed that the firm had decided to stop trading operations starting last Monday, Nov. 4, to mitigate the damage.

At the end of 2018, R&L Investments held P765 million worth of stocks on behalf of its clients, according to its audited financial statements.

According to various sources, the scam was discovered in the days leading up to the long All Saints’ Day weekend when the company was found to be short of P3 million worth of stocks at the end of the trading day.

As the hours progressed, and amid a mad scramble to borrow shares to cover this shortfall, it was gradually discovered that the value of missing stocks had ballooned to P300 million, and eventually to almost its entire inventory after a more thorough internal audit.

The scam remained undetected over the years because the settlement clerk was the same person who was in charge of preparing the daily stock position reports for the owners—reports which he confessed to doctoring in a separate handwritten confession seen by the Inquirer.

Moron, who was confronted by R&L Investments’ owners on Nov. 1, said he had started stealing from the firm in small amounts eight years ago, transferring the shares to another account under the name of one Julieta Sulapas with another stockbroker, Venture Securities. From there, 3 percent was paid to Sulapas’ account with Union Bank of the Philippines, and the balance being transferred back to Moron for his disposal.

Moron claimed to have acted alone, and said he was forced to steal in larger amounts over time because of a growing casino habit (“Nalulong din po sa casino”). The R&L employee also executed a promissory note endeavoring to return all that he had stolen, while maintaining that there were no cash or securities left for him to return.

In her letter to the bourse, Lee said the firm had been advised to “make good” on all its deliverables “so as not to create a problem with the PSE.”

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“Since these transactions are legitimate in nature, we shall abide, and borrow from other brokers if need be, or buy it back in order to deliver,” she said. “This is a very unfortunate event, considering that R&L Investments just celebrated its 50th year of being a stock broker.”

Bourse sources told the Inquirer that the firm’s owners had committed to sell personal assets like real estate, houses and other valuables to honor their obligations to their clients.

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