The Securities and Exchange Commission (SEC) will recommend this week the filing of criminal charges against at least five individuals -- among them presidential friends Dante Tan and Carmelo Santiago, and Best World (BW) lawyer Jimmy Juan -- for insider trading and stock price manipulation.
"As far as the individual violations are concerned, we have an airtight case," said Ruben Ladia, acting director of the SEC's prosecution and enforcement department (PED).
He said he will present today a partial report of the probe before the commission en banc, and might file it later at the Department of Justice.
Meanwhile, Speaker Manuel Villar Jr. proposed yesterday the immediate closure of the scandal-rocked Philippine Stock Exchange (PSE) and its replacement with a new institution.
Villar's proposal came in the wake of the BW Resources Corp. stock manipulation controversy involving the company's major shareholder, Tan, his associates and 11 brokers, some of whom are members of the PSE board of governors.
"We have to give our stock market a fresh start," he said.
The Compliance and Surveillance Group of the PSE had already named BW majority owner Tan as among those who could have rigged the stock price. Juan is a lawyer for BW Resources and also a major stockholder.
Santiago, on the other hand, is reportedly a member of President Estrada's co-called "midnight Cabinet."
Ladia said there will be at least five individuals who will be sued, but the number could rise to 11 if the SEC is able to complete its investigation. He said the probe could take years.
Ladia's department was supposed to present its report yesterday but it was still finalizing the document and was correcting "typographical errors."
Outgoing SEC Chairman Perfecto Yasay Jr. said the commission will meet en banc to make a notation of the BW report, but it cannot tamper or make changes in the document.
He estimated that the PED will be ready to submit its report today.
"It will be up to PED to decide whether to go straight to the DOJ and just give the members of the commission en banc a copy of the BW report for our notation," said Yasay, who steps down on Saturday.
Villar, on the other hand, said the closure of the PSE can be done by the SEC which can revoke the license it gave the exchange.
In any case, he said if the SEC does not do that, the House of Representatives will include in the Revised Securities Act a provision mandating the abolition of the PSE and its replacement with a new securities trading body.
Proposed amendments to the securities law are pending in the House.
Villar said the new stock exchange should be majority-owned by the public.
"We must not allow brokers to own enough of the institution to influence the market," he said.
He said his chamber is deliberately delaying the approval of the amendments to the Revised Securities Act so it can include enough safeguards to prevent a repetition of the BW fiasco.
"We must learn from past mistakes and put in place the necessary rules that are forward-looking. What we need are major structural changes that will uphold the market's integrity and credibility at all times, as well as redirect market thrusts towards those compatible with the global economy," Villar added.
So far, the SEC has not threatened to close the PSE. The most drastic step it has taken was to suspend trading after members of the PSE compliance and surveillance group resigned en masse.
Four SEC commissioners, however, changed their mind and eventually allowed trading to take place.
The commission has also fined the exchange for continuing to do business without a group that monitors the transactions.
Within the next few days, the SEC is due to release its own report on the BW mess.
At the same time, Villar suggested that new exchange should have "new economy stocks" (referring to companies conducting their business via the Internet) to bring in needed foreign capital.
Rep. Joey Salceda (LAMP, Albay), a former stock market analyst, said about 70 percent to 80 percent of the world's capital is invested in only 20 percent of the equities market, particularly in Internet companies.