SEC files charges vs Calata Corp. for alleged market manipulation, false statements

The Securities and Exchange Commission (SEC) on Wednesday filed criminal charges with the Department of Justice (DOJ) against Calata Corporation and its top officials for allegedly making misleading statements in connection with its P65-billion integrated gaming resort project in Mactan, Cebu.

Facing charges for violation of Section 24 (d) and Section 54.1 (c) of the Securities Regulation Code (Republic Act 8799) are Calata Corporation and its responsible officers Joseph Calata (president and chief executive officer), lawyer Jose Marie Fabella (corporate secretary), Benison Paul De Torres (chief financial officer and chief operations officer), Fr. Conrado Zablan (independent director), Johnny Uy (director), Halmond Parker Ong (director) and Edmund Solilapsi (independent director).

Also included in the charge sheet was Michael Foxman, director at the Macau Resources Group Ltd, and some unidentified individuals.

The SEC took exception to Calata's disclosure to the Philippine Stock Exchange (PSE) on August 23, 2016 that it was expecting to secure a license from the state-run Philippine Amusement and Gaming Corp. (Pagcor) to proceed with the Mactan Leisure City project by the end of 2017, despite the fact that its application was already denied on May 16, 2016.

According to Pagcor, the project, which was intended to rise on a 14-hectare property on Mactan Island, failed to meet the minimum 50 hectares of land required of applications for new casino licenses.

Pagcor also said it cannot issue a license since Waterfront Hotel and Casino is already operating in Mactan.

"When the disclosure came, they made it appear as if that there was still that plan [establishment of Mactan Leisure City]. In fact, the disclosure is by 2017 they will be able to receive that license and that by 2020 it will be fully operational," lawyer Jose Aquino, director of SEC enforcement and investor protection department, told reporters.

The SEC said the agribusiness firm apparently made the disclosure to induce the public to purchase Calata securities which were traded or listed on the local bourse.

At the end of trading day on August 23, 2016, the SEC said Calata's shares went up to P3.55 apiece, a 28.16-percent increase from P2.77 per share the previous day.

Trading volume, meanwhile, rose 2,455 percent to 47,755,000 from 1,869,000 the day before.

"An increase in price and volume of shares are considered the usual effect of positive disclosures which affect investor's sentiment which in turn influence their decision to buy or sell shares," the complaint stated.

"The next day, the trading volume rose to 71,867,000. The evidence shows that investors traded Calata shares in reaction to the disclosure concerning the establishment of the P65-billion Mactan Leisure City Project," it added.

Calata earlier partnered with Sino-America Gaming Investment Group LLC and Macau Resources Group Ltd. to establish an integrated resort on a 14-hectare property in Mactan Island incorporating three hotels, casino, and entertainment complex, commercial, retail, and conference facilities, and yacht club.

Calata was recently delisted from the PSE for multiple violations of disclosure rules.

The local bourse also directed Calata to conduct a tender offer to its minority shareholders. — BM, GMA News