The SEC has directed the PSE to effect the distribution to ACE’s clients securities or cash not later than June 30.
ACE has P1.25 million in cash ready for distribution to investors, which is not enough to cover all its debts and payables to customers. As of May 17, the adjusted claims against ACE’s clients amounted to P21.52 million.
Under the approved distribution schedule, named certificates will be released to named customers. All securities in the Philippine Central Depository and in street certificates will be distributed on the basis
of ratio and proportion to all clients that have claims against the particular security.
The SEC has directed the PCD and the Securities Clearing Corp. of the Philippines to turn over all ACE securities and cash which they have in their custody.
The SEC has also directed the bourse to provide conditions for its plan to engage the services of third parties to implement the take-over order.
ACE ceased operations last year due to severe cashflow problems and various violations of the securities law.
Among the options earlier being considered by the SEC to satisfy investors‚ claims are to draw on ACE’s P5 million surety bond or tap the securities investor protection fund, which has total collections of P20 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.
Brokers with less than P100 million paid-up capital are mandated to file a P5 million surety bond.
ACE is 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 src.
The SEC had filed with the Department of Justice a criminal complaint against ACE president Francisco Borromeo for violation of several provisions of the src.
In its complaint, the SEC accused Borromeo, a former PSE governor,of engaging in fraudulent activities to the detriment of ACE investors.
In particular, the SEC accused Borromeo of authorizing and using fictitious accounts, engaging in fictitious trades, selling clients’ securities without their knowledge and consent, and fabricating records and reports submitted to securities regulators.
Violation of any provision of the src carries a criminal penalty of a fine not less than P50,000 nor more than P5 million or imprisonment of not less than seven years nor more than 21 years or both.
Last January 15, 2004, upon request of the SEC, the Department of Justice issued a hold-departure order against Borromeo.