SEC slaps Abra Mining with P560 million fines

MANILA, Philippines — The Securities and Exchange Commission (SEC) has slapped Abra Mining & Industrial Corp., its directors, officers, transfer agent and certain stockholders with fines of at least P560 million for the unauthorized trading of unissued and unlisted shares from 2015 to 2019.

The SEC Markets and Securities Regulation Department (MSRD) in a decision promulgated on April 8 found Abra Mining guilty of violating Section 26 of the Securities Regulation Code (SRC) and Section 61 of the Revised Corporation Code (RCC).

The MRSD also found liable Abra Mining’s president James Beloy, corporate secretary Amelia Beloy, directors Conde Claro Venus, Carmelo Rafael Tansengco, Premy Ann Beloy and Joel Beloy and former director Belinda Gaskell.

“The officers and directors necessarily had, or should have had, knowledge of the illegal circumstances regarding the issuances of the illegal shares during the years that they served as directors of respondent Abra Mining,” the MSRD said.

MRSD said had the officers and directors faithfully exercised their duties as imposed by law, they would have prevented the fraudulent scheme from being carried out.

On top of administrative sanctions, the MSRD likewise revoked Abra Mining’s registration statement and corresponding certificate of permit to sell.

According to the SEC, Section 26 of the SRC states that it is unlawful for any person, directly or indirectly, to employ any scheme to defraud, or engage in any act or course of business which would operate as a fraud or deceit upon any person.

Section 61 of the RCC, meanwhile, provides that stocks shall not be issued for a consideration less than the par or issued price thereof.

The MRSD said the company and its officers violated Section 61 of the RCC when it issued shares for less than their par or issued price, given that the company’s financial statements during the pertinent years did not reflect any inflow of cash as proceeds for the issuance of the shares.

“As members of the board, James Beloy, Venus, Premy Beloy, Joel Beloy, Gaskell and Tansengco were responsible for the accuracy of the representations in the company’s financial statements. The MSRD dismissed the denials and lack of knowledge interposed by Abra Mining’s officers and directors, holding that their acts can only be attributable to their gross negligence in the performance of their duties,” the SEC said.

A separate decision by the MSRD also found the company’s transfer agent, Asian Transfer & Registry Corp., as well as its president, corporate secretary, assistant corporate secretary and treasurer guilty of violating certain sections of the SRC and its 2015 implementing rules and regulations.

Asian Transfer & Registry and its officers were found liable for the lodgment of the illegal shares into the Philippine Depositary and Trust Corp. (PDTC), which paved the way for the trading of the shares in the stock market.

“The transfer agent’s actions allowed the illegal shares to be lodged and gave them the appearance of being eligible, properly issued shares of AR, thereby inducing investors to buy and trade the shares. Thus, they were freely traded on the exchange, to the prejudice of the unsuspecting public who purchased the defective shares,” the MRSD said.

In another decision, the MSRD also held several stockholders of Abra Mining liable for violations of Section 26 of the SRC.

The stockholders were found to have never paid the full price of the shares that they supposedly acquired via private placement facilitated through Jeremias Beloy.

“Correspondingly, as the stockholders never actually made full – if any – payment of stocks’ price, the shares were not valid and existing and they  ought to have known that they were illegally issued. This operates as fraud upon stockholders and creditors of the company which issued said shares. Even further, as the stockholders circulated the illegally issued shares on the market, this operates as fraud upon the investing public,” the MRSD said.

The SEC said all officers and directors of Abra Mining and its transfer agent, as well as the stockholders, are disqualified from being a registered person and are prohibited from serving or acting as an employee, officer or director of a registered financial intermediary under the supervision of the commission within five years.

They are likewise disqualified from being an officer, director or person performing similar functions of an issuer of registered securities.

The case originated from discrepancies in Abra Mining shares lodged with the PDTC, which were in excess of the number of listed, registered, issued and subscribed shares submitted in the company’s filings with the SEC.

The SEC said illegal issuances of the company’s shares totaling 169.05 billion shares covering 474 stock certificates were found to have been made from 2015 to 2019.