SEC Chairman Lilia Bautista wrote the PSE board of directors in reference to the Securities Regulation Code (src) which provides that the PSE president must not be associated with any broker, dealer or member of the PSE for at least two years prior to his appointment.
Bautista said that in interpreting this provision, "we have taken note of the fact that Congress at the time of the passage of the src felt a need to professionalize the management of the exchange to remove the perception, real or not, that the exchange is an ‘old boys club.’"
She said the new requirement was included to ensure that management is able to act independently and not be subject to undue influence by member firms or listed companies to act in their interest at the expense of the investing public.
Bautista explained that Leung, who was ex-officio chairman of DBP-Daiwa Securities until June 2001, was nominated by the DBP Group since he was already DBP chairman, a government position, and not an owner or stockholder of DBP.
"In this instance he was nominee of the DBP Group which was the beneficial owner of a substantial number of shares of the broker-firm," Bautista said.
She added that the SEC can grant exemption from the src prohibition by virtue of its powers for exemptive relief, taking into account the special circumstances of his election as chairman of DBP-Daiwa Securities.
"By accepting the election of Mr. Leung as president of the PSE last year, the SEC has impliedly granted such exemptive relief," Bautista stressed.
But in the meantime, calls for Leung’s resignation continue to snowball. No less than his predecessor, former PSE president Ramon Garcia said the only way to resolve the election now is for Leung and chairman Vivian Yuchengco to resign "to dispel animosity within the exchange."
"Their resignation will effectively dismiss a lot of questions regarding the integrity of the stock exchange. As directors, they should take the lead in preserving the reputation of the PSE," he said. – Conrado Diaz Jr.