SEC backs PSE decision on Reynolds Phils case

The Securities and Exchange Commission (SEC) has given in to the Philippine Stock Exchange’s appeal to uphold the bourse’s ruling imposing penalties on the brokers involved in the stock manipulation of Reynolds Philippines Corp. (RPC).

A ranking SEC official said the commission is inclined not to pursue anymore the charges of wash sales and matched orders – both illegal schemes intended to manipulate stock prices – after it has accepted a cash settlement offer from RPC officials also linked to the case, leading to the termination of the investigation.

The PSE earlier raised concern that the SEC’s probe on RPC, where 10 brokers had been dragged as accessories, would put a dent on the exchange’s status as a self-regulatory organization (SRO) should the commission overrule the PSE’s findings.

The exchange has tagged and fined eight brokers for their involvement in the RPC stock fraud case: DBP-Daiwa Securities, First Orient Securities, UPCC Securities, Guild Securities, Jaka Securities, Mark Securities, Magnum International and IntraInvest Securities. The SEC has also linked two more unidentified brokers to the case.

Although penalties slapped on them were very low – ranging from only P15,000 to P30,000 each – some still have not paid while one, DBP-Daiwa, even made an appeal to the SEC.

"We have this understanding with the SEC on our role as an SRO that they will recognize our powers to discipline our own members, provided there is no abuse of discretion," PSE president Ramon T. Garcia said.

The exchange was granted an SRO status by the SEC in 1997 but this was temporarily withdrawn last year at the height of the BW Resources trading scandal, when the bourse and its members suffered from the growing negative perception in the local stock market. – Conrado Diaz Jr.