Directors’ row splits bourse

The Philippine Stock Exchange (PSE) is in a quandary these days: It faces a tumbling stock market, a widening rift between brokers and non-brokers in the board of directors, and a legal battle that could boil down to the members’ consensus.

At the center of the controversy is the recent election of the 15-man board of directors last Saturday, with veteran broker Vivian Yuchengco gaining the support of the non-broker directors to clinch the PSE chairmanship.

Yuchengco (a former president of the old Makati Stock Exchange) beat Robert Coyiuto Jr. (who was PSE president in 1992 and chairman in 1994) for the chairmanship by a narrow 8-7 count.

Coyiuto’s camp, however plans to contest the result before the court on the premise that the eight non-broker directors, including PSE president Ernest Leung, should have abstained from voting – as was customary in the past elections – and left it to the brokers themselves to choose their chairman.

Coyiuto was citing the fact that his entire five-man ticket all made it to the winning circle in the elections, with only two coming from Yuchengco’s slate, including Yuchengco herself.

There are only seven brokers represented in the board, with the majority compared of non-brokers as required under the Securities Regulation Code.

Coyiuto’s legal team led by Judge Cesar Cruz has also challenged the qualification of Leung to serve as president, citing the SRC restriction that no official in the PSE management be connected with a securities firm at least two years prior to his appointment.

Leung, in his capacity as chairman of the Development Bank of the Philippines, served as ex-officio chairman of joint venture DBP-Daiwa Securities until June last year. He was appointed PSE president in December.

There are reports that some broker-members symphatetic to the Coyiuto camp have been soliciting support from the other PSE members for special elections for the non-broker directors.

The eight non-brokers are all appointed by the PSE board and are not voted by the members themselves.

The PSE has even indefinitely postponed the holding of the 7th Chairman’s Cup Golf Tournament earlier scheduled on March 16 at the Tagaytay Midland "due to the fact that solicitations sent to major sponsors for the tournament were not favorably endorsed and for lack of time to pursue new sponsors."

A broker even blamed Yuchengco for the postponement of the event, pointing out that she had committed the support of the said corporate sponsors, PLDT and ABS-CBN, but was eventually turned down.

The Securities and Exchange Commission, the corporate watchdog and overseer of the PSE, meanwhile, avoided being dragged in the current brouhaha and implied it is leaving it to the court to decide on the matter.

SEC Associate Commissioner Juanita Cueto, a former broker herself, said since some of the quasi-judicial powers of the SEC have been absorbed by the regular courts and the PSE is a self-regulatory organization (SRO), the issue on Leung and the non-brokers would be better left for the court.