Guessing game at PSE over

The guessing game is over.

The Securities and Exchange Commission (SEC) has actually named five individuals and seven broker firms in its probe of insider trading and stock price manipulation at the bourse.

In documents that were supposed to be filed at the justice department, the SEC's prosecution and enforcement department (PED) said it found prima facie evidence against Dante Tan, majority owner of Best World Resources Corp.; Carmelo Santiago, owner of Melo's Restaurant; Roberto Co, Clement Saw and Jimmy Juan.

Also named were Aurora Securities, Asiasec Equities Inc., Belson Securities Inc., Mark Securities Corp., PNB Securities Inc., SEC 2000 Inc. and Vickers Ballas Securities Philippines Inc.

The documents, however, were never filed because Juan had obtained a writ of preliminary injunction from the Court of Appeals.

His lawyers reminded the SEC that the injunction bans its officials and employees from "further investigating BW shares transactions ... and taking any other action based or using the PSE (Philippine Stock Exchange) report."

In one of the documents, Ruben Ladia, acting director of the PED, told Justice Secretary Artemio Tuquero that they did not base their probe on the PSE report.

Because of this, former SEC Chairman Perfecto Yasay Jr. said it is still possible for the PED to submit a partial report to the justice department.

In their report, the PED said there were a number of instances where the individuals and the broker firms named violated the Revised Securities Act (RSA).

Among these include Sec. 26 of the RSA, which states that it is unlawful to create a false or misleading appearance of active trading in any security registered on a securities exchange, and to transact such a security without any change in beneficial ownership.

The PED also noted that Tan, through the Aurora Securities, bought 10 million shares of BW on Jan. 27, 1999 at various prices and under Account No. 004753 DDT.

Tan, through SEC 2000, then sold the same number of shares to his own account under Customer Code SEC 168.

On various dates, the SEC said Juan, as a buyer, and Tan, as a seller, have traded more or less the same number of shares which were matched under the Mak Trade System of the PSE.

The PED also said Tan started accumulating BW shares as early as January 1998, when it was still named Greater Asia Resources. Eleven months later, he already had about 84 million shares.

SEC said Tan could have violated Sec. 36 of the RSA when he failed to disclose such an acquisition.

The mistake was repeated twice on June 1999, when Armstrong Securities advised Tan that it got a total of 75 million shares from various brokers.

The SEC's money market and operations department said it got the report on such a transaction three months later.

Juan also failed to make a timely disclosure of his purchases of about 58.7 million shares as of Feb. 21, 1999.

In a related development, the PSE has already complied with all but one of the SEC's conditions in reforming the bourse.

In a report, the PSE board of governors told the SEC that it has decided to retain Jose Cervantes as its chief operating officer because "the board was acting within its express powers when it approved the recommendation of the PSE search committee."

The SEC has actually given the exchange until last Friday to institute reforms in the light of the BW scandal. Failure to do so could mean sanctions, including a P50,000-a-day fine.

Among the reforms being sought by the SEC were the inclusion of more non-brokers, the security of tenure and the granting of bonuses to PSE employees, and the hiring of professional managers not affiliated with any brokerage company.

Cervantes, who was appointed COO on Feb. 23, was criticized by lawyer Ruben Almadro, head of the PSE's compliance and surveillance group, as a patron of the so-called "Old Boys Club."

It was believed that this clique of brokers influenced the results of the PSE report on the BW scandal. -- With Conrado Diaz Jr.