In a letter to Philippine Stock Exchange president Ramon T. Garcia, SEC Chairwoman Lilia Bautista said while the subject case was forwarded to the PSE’s Listings and Disclosures Group for further investigation, the SEC could conduct its own probe as under the Securities Regulation Code (src), "primary oversight for compliance by listed companies shall remain the responsibility of the Commission."
Bautista noted that based on the PSE's Market Surveillance Department’s initial findings, "there is a need for further inquiry into the possibility of a violation of the src provisions on tender offer and disclosure of acquisition by more than five percent of beneficial ownership."
She added that in the PSE's inter-office memorandum sent to the Business Conduct and Ethics Committee, there was no recommendation made relative to any appropriate action to be taken on the part of the main broker involved in the questioned transactions.
"We wish to be apprised promptly of PSE’s action in this regard, as principal oversight on member-brokers lies within the responsibilities of the PSE as an SRO (self-regulatory organization)," Bautista said.
The case stemmed from a series of cross sales between June 27 to Aug. 13 this year in seldom-traded Liberty stocks, making it one of the most active issues during the period. The bulk of the cross transactions were made by only one broker, Summit Securities owned by former PSE chairman Harry Liu. The brokerage firm holds a 9.91-percent stake in Liberty.
The disputed sale involved some 485 million shares jointly owned by Liberty’s three biggest shareholders: chairman and president Raymond Moreno, senior vice president Edgardo Quiogue; and executive vice president Rene Jose Domingo. Apparently, the sale dealings in these shares – which account for 38 percent of the company’s outstanding capital – to an unidentified investor or investors were outright violative of src rules.
The src mandates that a change in beneficial ownership involving at least five percent of outstanding shares should be properly disclosed to the regulators and, until amended in a draft bill to be submitted in Congress, requires a purchasing party to tender an offer to the remaining stockholders upon acquisition of at least 15 percent of a listed company or 30 percent within a 12-month period.