SEC prepares to take over PSE

The Securities and Exchange Commission (SEC) is prepared to flex its regulatory muscle and assume direct control over the operations of the Philippine Stock Exchange (PSE) in the event of a court ruling favoring the complaint lodged against the PSE board of directors by a group of former bourse officials.

"We are ready to take over," SEC Chairman Lilia Bautista said in a press briefing.

Past PSE president Ramon T. Garcia, along with former PSE chairman Trinidad Kalaw and former governor Joseph Roxas, petitioned the Pasig Regional Trial Court last Wednesday to nullify the results of the recent elections of the PSE's 15-man board, which installed Vivian Yuchengco as the new chairman, beating another veteran broker, Robert Coyiuto, by only a vote.

Through their legal counsel Sison & Associates, the complainants asked the court to order the Exchange to hold another poll wherein this time, the broker-members will cast their vote for the eight non-broker candidates in the board.

Thus, a favorable court ruling would leave the present PSE board in disarray as the eight non-brokers, including PSE president Ernest Leung, will be ordered to "cease-and-desist from further discharging their duties while the case is pending."

Bautista said the SEC, as corporate regulator and overseer of the Exchange, will have to act swiftly to avert a leadership vacuum, taking into consideration the interest of the investing public, its impact on the capital market and the economy in general.

With the SEC in control, the PSE automatically loses its self-regulatory organization (SRO) status, although such an instance has happened before.

It will be recalled that the SEC, at the time of then Chairman Perfecto Yasay Jr., lifted the PSE's SRO status in March 2000 in the aftermath of the celebrated BW Resources stock scandal.

During that time, the entire staff of the PSE's Compliance and Surveillance Group led by Ruben Almadro resigned in protest over the conduct of the BW probe. The CSG, the PSE's trading watchdog, was responsible in releasing the BW report that indicted Dante Tan and other prominent individuals in the price manipulation scheme.

A small team headed by SEC Market Regulation Department director Jose Aquino took over the CSG while the SRO lifting was in effect.

But after six months, the SEC, under its new chairman, Lilia Bautista, recalled the SRO's lifting as the PSE was able to comply with several reform measures, including certain changes in trading rules and board composition.