4 brokers fined for ‘suspicious’ trading of stocks
Four stock brokers were penalized by Capital Markets Integrity Corp. (CMIC) in relation to the “suspicious” trading of shares of agricultural products distributor Calata Corp.
Based on a CMIC report on audit findings dated October 19, a number of trading participants were cited for various violations but four were linked to violations in relation to Calata.
Nieves Securities was slapped with a fine of P260,000; Tower Securities, P230,000; HDI Securities, P200,000; and Sunsecurities Inc., P30,000.
The report from CMIC, mandated as the PSE’s guardian against securities trading violations like insider trading and stock price manipulation, itemized the penalties on Nieves to include its failure to obtain a new account information for one of the parties to a joint account (P30,000); failure to inform the CMIC “in writing of its knowledge or suspicion of a client’s transactions, which possibly constitute unusual trading activities, trading-related irregularities or other violations of securities laws” (P200,000); and “failure to slow substantial proof that it engaged its clients in a face-to-face meeting and fully sought information about their financial situations, investment experiences and investment objectives (P30,000).
The second and third violations slapped on Nieves were likewise imposed on Tower and HDI, which were each fined a total of P230,000.
In the case of Sunsecurities, the brokerage firm was penalized for “failure to exercise due diligence in determining its clients’ financial situations, investment objectives, experiences and risk tolerance.”
Sunsecurities was the first to conduct the questioned Calata trades at the initiative of some of its traders but likewise the one most prompt in undertaking corrective action, an industry source said. As such, the penalty was much lower compared to the other three. “It happened when the owners were abroad and when they came back, they were surprised at the volume and wrote a letter saying they won’t accept any more trades,” said the source privy to the investigation.
The report also showed that all four trading participants had appealed to the CMIC board but their respective requests for reconsideration were denied. The brokers can still appeal their case with the Securities and Exchange Commission, which has committed to finish its own investigation on Calata by the end of this month.
The CMIC report, which was posted on the PSE website on Friday, did not cite Calata as the issuer of securities which were the subject of suspicious trades, but industry sources confirmed to the Inquirer that the violations indeed pertained to the probe on the company.
