The Securities and Exchange Commission said Friday it imposed a P106-million fine against the Philippine Stock Exchange for allegedly making inaccurate and misleading information on the brokers’ collective ownership of the local bourse.
The SEC said in a decision PSE remained non-compliant with the 20-percent industry limit as brokers’ ownership in the stock exchange was still at 22.05 percent, even after it recently completed a P2.9-billion rights offering.
It said this was contrary to PSE’s claim that the rights offering would reduce brokers’ ownership in the local bourse to 20 percent as it already excluded the stake of inactive trading participants in the computation for brokers’ ownership in the bourse.
The SEC’s Market Securities and Regulation Department said that until such time that the inactive trading participants amended their articles of incorporation to exclude brokering as part of their activity, changed their corporate name and obtained SEC approval for these corporate actions, PSE should still include them in the computation for brokers’ ownership in the exchange.
“Moreover, as regards PSE’s stock rights offering, even after full implementation of the same, the brokers’ shareholding will be 22.05 percent, still exceeding the 20-percent industry limit by 2.05 percent,” the regulator said.
“Hence, MSRD cited PSE for violation of Rules 17.1.1.2 and 17.1.1.1.3[a] of the implementing rules and regulations of the Securities Regulation Code, that is, for making inaccurate and misleading information on the impact of inactive brokers and stock rights offerings on the brokers collective ownership of PSE,” it said.
The SEC also told PSE to take measures to ensure faithful compliance with the applicable rules and regulations being implemented by the regulator to avoid similar violations in the future which would be subject to heavier sanctions/penalties.
The PSE said it would seek reconsideration of the latest SEC decision.
The SEC has been urging PSE to reduce brokers’ ownership in the exchange to 20 percent as provided under the Securities Regulation Code.
Reducing brokers’ ownership in the local bourse is one of the conditions set by the SEC before it could allow PSE to acquire majority stake in Philippine Dealing System and Holdings Corp., the operator of the bond exchange.