Kudos to SEC on Glasgow

Small investment firms suspected of operating so-called pyramiding schemes have come tumbling down like a deck of cards, thanks to the vigilance of the Securities and Exchange Commission (SEC).

Many small investors, including teachers and policemen, have reportedly placed their hard-earned money in the hands of these firms which promised large returns. The scheme is very attractive. In fact, one firm is said to have generated close to P28 billion.

The SEC has been investigating these firms. But many have wondered whether or not they will get their money back. Cynics say all that the SEC can do is close down these operations and slap them with stiff penalties but giving investors back their money is a different issue altogether.

Last week, however, SEC did help some 9,000 creditors of Glasgow Credit and Collection Services, Inc., get their money back, or at least a large portion of it – 80 percent to be exact. This is some kind of first; among investment companies that the SEC has investigated and given a cease-and-desist order (CDO). Glasgow is the first to return money to its clients.

What the SEC has done gives to other similarly situated investors. Glasgow customers say recovering 80 percent is a lot better than nothing, and is definitely much, much better than the P100,000 limit that depositors of closed banks get from the Philippine Deposit Insurance Corp. (PDIC).

We do not know what formula the SEC used to bring the Glasgow case to a happy conclusion. We simply hope the same formula could also be applied to the likes of Multitel. We also do not know whether or not the SEC compelled Glasgow president Manuel Roldan to remain visible in public to calm the nervousness of his clientele. But he did remain visible and that makes for confidence in a market that has been made a nervous wreck by the flight of the corporate officers.

One congressman recently made a sweeping statement against the SEC while branding the country as the "pyramiding capital of the world." According to him, this is so because of SEC’s failure. With the respect, we will differ from this solon’s point of view. The SEC has been vigilant. And with the successful conclusion of Glasgow’s case, we can say that the SEC has generated some hope for small investors.

Poorly managed

Contrary to perceptions, the Manila Electric Co. (Meralco) is one of the most reliable and efficient utilities in the country.

Meralco’s electrification level has reached 97 percent of all households and 98 percent of all barangays within its franchise area as of 2001. This is a far cry from the Philippine average of 67 percent and 85 percent, respectively.

It has the highest customer to employee ratio in the country (600 customers per employee as against an average of 250 customers), exhibiting an unparalleled level of productivity.

Up until the delay in Meralco’s rate increase in 1998, its financial performance has consistently been described as "a bedrock of stability and conservatism" by various financial publications. Furthermore, electric utilities must continuously look for funds at the most competitive rates/terms amidst uncertainties.

Unlike other industries, electric utilities require day to day or constant upgrading of equipment due to the ever-growing increase and spread in their customers and load. Meralco has been able to meet these requirements amidst uncertainties in foreign exchange and changes in government policies.

Despite being fifth in terms of load density, Meralco’s operations have been remarkable compared to other utilities. It has the lowest interruption frequency rate (IFR) and cumulative interruption time (CIT) in the country, which means that the electric company has the least number and shortest duration of brownouts.

Also, Meralco’s system loss given the spread of its franchise is one of the lowest in the country. It was able to improve its system loss from 24 percent in 1986 to 10.63 percent last year which resulted in significant savings passed on to its customers.

Aside from being the biggest tax-paying corporation, Meralco has always been mindful of its social obligation, as evidenced by its rural and depressed area electrification programs, upgrading of streetlights in its franchise area, reforestation of the watershed at La Mesa dam, and its support of various socio-civic projects in the country.

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