SEC says bourse still in violation of ownership rule

After a P2.9-billion stock rights offering that diluted brokers’ ownership in the Philippine Stock Exchange (PSE), the local bourse is still in violation of the 20-percent limit on single industry ownership, the Securities and Exchange Commission (SEC) said on Friday.

The excess ownership amounts to close to 2 percent, which the PSE has proposed to address by excluding dormant brokers from the computation, but the SEC said these brokers must first amend their charter to exclude brokering for this to be possible.

The statement was issued by the SEC to explain the penalty of P106,000 slapped on the PSE “for violation of the disclosure rules.”

The SEC explained that the PSE’s earlier statement that the stock rights offering would make it compliant with the 20-percent single industry limit was “inaccurate and misleading.”

The corporate watchdog noted that “even after full implementation of the same (stock rights offering), the brokers shareholding will be 22.05 percent, still exceeding the 20 percent industry limit by 2.05 percent. For its part, the PSE estimated on Friday that after the stock rights offering, the cumulative ownership of stock brokers was about 21.71 percent of 84.92 million outstanding shares.

On Feb. 28, the SEC ordered a halt on the trading of PSE shares and ordered the bourse to make a “prompt, full, fair and accurate” disclosure.

The SEC added that the PSE had been “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.”

The PSE was directed to pay P106,000 to the SEC not later than April 2, 2018, as penalty for its first violation under Rule 54 of the Securities Regulation Code. The local bourse, for its part, said it would appeal the penalty.

The PSE has so far secured commitment from various shareholders to buy 72 percent of Philippine Dealing Systems Holdings Corp. (PDS Group) but even with P2.9 billion in proceeds from a stock rights offering already generated, it’s not keen to engage in a bidding war against state-owned Land Bank of the Philippines.