Asian Capital investors given 2 options to satisfy claims

The Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) have listed two options in satisfying investors’ claims of Asian Capital Equities Inc., (ACE) which closed shop due to financial difficulties and various violations of the securities law.

Jose P. Aquino, head of the SEC’s Markets Exchanges Department, said the first option is to draw on ACE’s P5-million surety bond to answer for claims of investors.

Brokers which have yet to comply with the P100-million unimpaired paid-up capital requirement are mandated to file a P5-million surety bond.

Aquino said "any person damaged by the failure of a broker-dealer to comply with the provisions of the Securities Regulation Code shall be entitled to sue the sureties under such bond and to recover the damages so suffered."

The other option being considered is to tap the securities investor protection fund (SIPF), which has total collections of P200 million. Each client or investor can claim P100,000.

The SIPF has been formed to compensate investors for the ordinary loss or damage they may suffer due to business failure or fraud or mismanagement of persons with whom they transacted.

Aquino said the SEC and PSE have already notified the surety company about the present condition of ACE. He said liabilities of ACE have already exceeded its assets.

As of Feb. 27, 2004, total claims filed against ACE amounted to P95.2 million.

ACE is now in the process of liquidating all its assets to settle unpaid obligations.

The PSE has taken over the operations of ACE because of the latter’s deteriorating financial condition and after finding reasonable grounds it violated provisions of the Securities Regulation Code (SRC).

To safeguard the interest of the investing public, a cease and desist order was issued by the SEC against ACE for violation of Sections 26.3, 30.3, 49.1 and 52.1 of the SRC. The provisions cited concern fraudulent transactions and restrictions on borrowings by members, brokers and dealers.

As of September 2003, the trial balance of ACE showed a negative net worth amounting to P65 million. Although the firm has an excess net capital of P3.7 million, without its subordinated loan of P77 million, the net capital deficiency will amount to P73.55 million. – Zinnia dela Peña