SEC fines PSE Inc. for ‘misleading’ info on ownership impact of stock rights offering

The Philippine Stock Exchange (PSE) is facing fines for supposedly misleading information on the actual impact of its recent stock rights offering on the collective ownership of brokers in the exchange, the Securities and Exchange Commission (SEC) said Friday.

The commissioned imposed a fine of P106,000 on March 22 against the stock exchange operator “for inaccurate and misleading information on the impact of inactive brokers and stock rights offerings on the brokers collective ownership of PSE,” the SEC said in a statement.

“Pursuant to SEC Memorandum Circular No. 6, Series of 2005, the PSE was directed to pay the SEC in cash or manager’s check, the amount of P106,000.00 not later than April 2, 2018 as penalty...” the regulator said.
 
 “Further, PSE was warned to take such measures that will ensure faithful compliance with the applicable rules and regulations being implemented by the SEC to avoid similar violations in the future which shall be subject to heavier sanctions/penalties,” it said.

The corporate regulator emphasized that it in a letter dated February 27, it asked the PSE to make a “prompt, full, fair and accurate disclosure” in the company’ regulatory filing on February 26, 2018 regarding the stock rights offering that claimed it would result in the dilution of brokers’ ownership in the exchange to below 20 percent.
 
The SEC also directed PSE to show cause in writing within five business days after receiving the order why it should not be penalized for the disclosure “containing inaccurate and misleading information.”
 
 
But the regulator found the PSE’s explanation insufficient to raise “reasonable and substantial grounds” and reverse the SEC’s findings. 

“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 SEC said. 

It cited the 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 in making inaccurate and misleading information on the impact of the inactive brokers and the stock rights offering on the brokers’ collective ownership of the exchange.

During the listing ceremony of the PSE’s 11.5 million shares on Thursday, the stock market operator noted it has reduced the brokers’ ownership to 21.38 percent from 23 percent.

In a January 17, 2018 letter, the SEC informed the PSE that it has directed the inactive brokers to amend their articles of incorporation to exclude stock brokerage as part of their activities and change their corporate names.

Until the amendments have been completed—and approved by the SEC—the PSE must to include the inactive brokers in computing the shareholdings of all brokers in the exchange, and that the information must be in the PSE’s monthly report. —VDS, GMA News