Gatchalian firms threaten legal action vs PSE

MANILA, Philippines - The six publicly-listed firms affiliated with plastics king William Gatchalian threatened yesterday to take legal action against the Philippine Stock Exchange (PSE) unless the local bourse issues a statement clearing them of any wrongdoing.

Acesite (Philippines) Hotel Corp., Forum Pacific Inc., Mabuhay Vinyl Corp., Philippine Estates Corp., Waterfront Philippines Inc. and Wellex Industries Inc., through their legal counsels, demanded that the PSE and the Securities Clearing Corp. of the Philippines “immediately issue a joint statement correcting or rectifying the impression that they engaged in fraudulent trading activities and further stating that they are not under formal investigation for any anomaly.”

They also asked the PSE and the SCCP to include in the joint statement that “there is as yet no formal or final finding that fraudulent activities have in fact taken place.”

The six companies likewise asked the PSE to stop issuing adverse public statements without giving them the opportunity to present their side.

“Otherwise, our clients will not hesitate to institute the appropriate legal action against the Exchange to recover the damages caused to them,” the Wellex Group lawyers said in a letter to the PSE.

The PSE over the weekend directed stockbroker firms to ensure the early delivery of securities or cash with respect to trades of these stocks.

PSE president Francis Lim said the selling stock brokerage should ensure that the shares are already in their “house” account with the Philippine Depository & Trust Corp. before posting any sell order while the buying broker should require the investor to deliver upfront 100 percent cash payment before posting any buy order.

Lim said this was necessary to maintain and preserve an efficient, fair and orderly market and safeguard the interest of the investing public.

He said failure of brokers to comply with the PSE’s directive would result in suspension or imposition of other penalties.

The legal counsels said the PSE’s press releases “created a hugely adverse impact on our clients’ business reputation.”

“Of even greater significance is the fact that no formal charge, much less any information on our clients’ alleged violations was ever relayed to them to explain or clarify their side.”

 “It is clear to us that our clients are being singled out from among the publicly-listed companies without the benefit of due process. The Exchange, under the guise of protecting the public, unreasonably used its blanket authority on mere “suspicion” (against whom, it is unclear) to unilaterally restrict the free trade of our clients’ shares, much to the damage and detriment of the investing public as well as to the reputation of our clients. In fact, to date, the Exchange is silent as to the alleged infractions committed by our clients,” the lawyers said.