Former stockbroker convicted for violations of securities law

A former stockbroker who had defrauded clients was convicted for seven violations of securities laws, the first criminal conviction under the Securities Regulation Code.

The Regional trial court of Makati City (RTC) found Francisco Borromeo, former president of the defunct brokerage house Asian Capital Equities Inc. (ACEI), guilty of securities violations. He was sentenced to pay a total amount of P2.1 million.

Given the criminal nature of the complaint, some of the victims had hoped that the judgment would include some prison term, but the Makati court did not prescribe any.

While it was also cited as a landmark case, some market practitioners were left wondering why there was no jail time ordered for Borromeo.

The cases against Borromeo were filed on January 2005 for “unlawful and felonious acts he committed in order to defraud his clients, including, among others, the sale of his client’s shares without his client’s consent, the use of fictitious and dummy accounts in buying transactions and his failure to deliver the payment proceeds from the sale of his client’s shares,” the PSE said in a statement.

The amount involved was estimated at a minimum of P100 million.

The stockbrokerage ACEI was shut down in 2003 and its assets, including its trading right, were liquidated in 2008 to settle some liabilities to clients.

The verdict was issued by Judge Selma Palacio Alaras of Branch 62 of the RTC on March 19, 2013, following the withdrawal of Borromeo’s pleas of not guilty and his voluntary entry of pleas of guilty on all seven charges, the PSE said in a statement.

“In the course of the presentation of evidence against the accused, Borromeo reconsidered his ‘not guilty’ plea and entered a plea of guilty,” said Senior State Prosecutor Peter Ong of the Department of Justice.

Borromeo was arraigned on Aug. 14, 2007, where he entered ‘not guilty’ pleas to all the charges filed against him. In May 2007, the PSE sought the help of the public in tracking down Borromeo, who had gone into hiding after several arrest warrants were issued against him.

PSE president Hans Sicat said the decision was in line with the good governance efforts of the PSE and the government. “I understand that this is the first criminal conviction under the Securities Regulation Code which is one of the reasons why the PSE has been following this case closely. The outcome of this case shows that white collar crimes are punished in this country,” Sicat said.

“We thank all the hard work of the Securities and Exchange Commission and the Department of Justice in helping ensure that justice is served to Borromeo. This should help give more confidence to the growing investing public,” Sicat added.