SEC upholds fines vs. NOW Corp.

The Securities and Exchange Commission (SEC) has upheld its earlier decision to impose fines against NOW Corp. over alleged “misleading disclosures.”

In a five-page order dated February 16, the SEC’s Enforcement and Investor Protection Department denied the request for reconsideration filed by NOW Corp. and its chief Mel Velarde for lack of merit. 

The decision upheld its imposition of a P1 million fine each against the company and Velarde in June 2023.

The SEC fined NOW Corp. and Velarde for supposed misleading disclosures.

According to the SEC, the case stemmed from NOW Corp.’s November 2021 disclosure that it has no knowledge on the details of the motion supposedly filed by the National Telecommunications Commission (NTC) before the Supreme Court against NOW Telecom Company Inc. since it is not party to the case.

NOW Telecom is an affiliate of listed NOW Corp.

NTC's motion was in connection with NOW Telecom's P2.6-billion liability representing unpaid supervision and regulation fees (SRF) and spectrum user fees (SUF).

According to its earlier disclosure, NOW Corp. said it should not be made accountable for NOW Telecom's alleged violations because NOW Corp. and Velarde are "persons with separate and distinct personalities" from the telecom firm.

The SEC, however, said it found no merit in NOW Corp. and Velarde's justifications.

NOW Corp. and Velarde contested the SEC order, which found the company and its CEO  administratively liable for violation of Section 24.1(d) in relation to Section 54.1 of the Securities Regulation Code (SRC) for failing to disclose material information to the public.

In its latest order, the SEC emphasized that NOW Corp. and Velarde “cannot simply deny that they were unaware of the details surrounding the Motion filed by the NTC.”

“To be simply dismissive about it and to nonchalantly disclose that ‘The company has no knowledge of the specific details surrounding the alleged Motion field by the [NTC]...’ created a misconception to the investing public,” the SEC said.

The corporate regulator said that “such disclosure is misleading as NOW Corp. and Mr. Velarde are fully aware of the specific details surrounding the Motion or the Case, that is, the unpaid SUF and SRF of Now Tel with NTC.”

“In this connection, it is clear that there was concomitant failure on the part of NOW Corp. and Mr. Velarde to make full, accurate and timely disclosure of a material fact or information about securities as mandated compliance to a listed company constitute a violation of Section 24.1 (d) of the Securities Regulation Code,” the SEC said.

GMA News Online reached out to Velarde and NOW Corp. for comment, but no response yet has been received as of posting.

The SEC, likewise, dismissed as “unavailing” the claim of the NOW Corp. and Velarde that the disclosure of the details surrounding the NTC motion would violate the sub judice rule.

“It must be emphasized that what sub judice rule prohibits is to give comments and disclosures pending judicial proceedings. In this particular case, NOW need not necessarily give its comment and disclosure regarding the Motion pending with the Supreme Court,” the SEC said.

“What is required of NOW to disclose are ‘relevant information not reported in the news article’ which encompasses ‘financial results and other information which is material to investor's decision.’ Hence, we do not find any application of the sub judice rule in this particular case,” the corporate regulator said.

NOW Telecom has file for a re-computation of the SRF before the Supreme Court as it denied the National Telecommunications Commission’s (NTC) claims that it owes P2.6 billion in SRF and associated charges.—RF, GMA Integrated News