The Securities and Exchange Commission has charged at least 12 people with “anomalous” trading of shares of agricultural product distributor Calata Corp. and conspiring to “intentionally and unlawfully” raise share prices for their own profit.
In a 78-page complaint-affidavit dated November 26 and filed at the Department of Justice, the SEC accused the respondents, along with a number of John and Jane Does who have yet to be identified, of engaging in questionable trading of Calata shares from May 23 to June 8 this year through multiple brokers.
The complaint said these people used illegal schemes such as “painting the tape” and “hype and dump” for their own profit.
The 12 respondents are Michael Ilustre Angeles, Carmelo de la Cruz Bunag, Arnold Ryan Daquiz Dellosa, Richie Ramille Isip, Arnold Daquiz Martin, Gary Lincoln Calixto Taboso, Dennis Philippe Valencia Vistan, Zandro Jose Sigfrido Laki Zulueta, Juvy Ocampo, King Bryan Sulit, Alvin Morfe and Sheryl Sia.
The SEC said the case also included various John and Jane Does “who may have provided the funds for the trades” or “abetted in the commission of the crime” but whose identities and addresses have yet to be identified.
“Painting the tape” refers to the manipulative device of buying and selling shares to create the illusion of high trading activity and attract other traders.
“Aside from the high volume of the buy transactions, the frequency and timing support a finding of market manipulation through hype and dump, leading to an upward movement of the share price,” the SEC said.
The SEC cited the testimony of the salesmen of brokers that some respondents would call them many times a day, sometimes more than 20 times a day to post various buy orders with different prices. “Clearly this scheme falls under the definition of hype, of engaging in buying activity at increasingly higher prices for the purpose of raising share prices which is explicitly prohibited under the SRC (Securities Regulation Code),” it said.
“After achieving record peaks for the price of CAL shares, they started dumping their shares to the public by selling them at price levels above acquisition price,” the SEC added.
To maximize their dumping activity and dampen the downward movement of the price of CAL shares during this selling spree, the SEC said the respondents resorted to “painting the tape” and hype-buying through at least four brokers—Nieves Securities, HDI Securities, Venture Securities and Tower Securities. The SEC said this was “to deceive the public into thinking that the shares were being sold by different owners in due course, as opposed to the truth that they were being unloaded by an organized group which would have accelerated the fall of the price had the public become aware of this plot.”
The respondents were also accused of employing manipulative practices such as the creation of temporary funds to engage in other manipulative practices. The SEC said these manipulative devices “were clearly coordinated and intended to have a significant impact on the behavior of the volumes traded and prices of CAL shares to the public’s detriment.”