But the Securities and Exchange Commission (SEC) said it would have to wait for the PSE’s investigation report before deciding whether to conduct its own probe or not to validate PSE’s findings on Meralco.
"We are still awaiting the PSE report. We will review their findings," an SEC official who declined to be identified said yesterday.
The PSE Compliance and Surveillance Group said there was insufficient evidence to establish insider trading on Meralco shares despite the unusual increase in the volume of trade prior to the release of the Supreme Court order to refund Meralco customers in alleged excess charges late last year.
The investigation was spurred by the sharp selldown of Meralco stocks three weeks prior to the release of the SC ruling, fueling speculations that the decision had been leaked and used for market positioning to the detriment of other investors.
The CSG said there was noticeable increase in trading volume from Nov. 14 to 15 last year. Price behavior was modest with Meralco A down 3.57 percent from P14 to P13.50 and B shares down by 12 percent from P18.75 to P16.50.
In view of significant changes in volume prior to the release of the SC decision, the CSG conducted a review of the trading data on Meralco shares from Oct. to Nov. 15. The investigation tracked decline in the prices of Meralco beginning Oct. 1 to Nov. 19 when prices registered an upward tick.
The CSG said the changes in trading volume and prices were more pronounced on Nov. 15 despite the fact that disclosure to the PSE on the SC decision was made in the afternoon.
It said none of the related parties of Meralco surfaced as clients in the audit findings nor did records of the transfer agent show movement in the shares of Meralco’s directors, officers and stockholders owning more than five percent of the outstanding capital.
The CSG also pointed out that the efforts were made to secure information from others who could have access to information at the court including those that could be privy to drafting of the SC decision. "This was a daunting task to track transaction of parties that may be privy to the decision process of the Supreme Court. Endeavors to secure such information was not fruitful rendering determination of insider trading in this respect difficult and inconclusive," the CSG said.
The Supreme Court found Meralco guilty of overchanging its clients since 1994.
Meralco officials, however, denied any wrongdoing and said the firm’s stock transfer agent would be the best person to ask.
The Securities Regulation Code prohibits any individual, regardless of position within the company, from buying or selling the company’s stock while in possession of material information which is not yet publicly disseminated.
The prohibition even applies to persons not employed by the company if they have access by any means (including but not limited to tips from others) to material nonpublic information about the firm.