In a separate advisory, the SEC also urged the public to be more careful in buying shares or membership certificates such as timeshares, membership in resorts, golf, country and other clubs.
In its advisory on hospitals, the SEC said it had received information that several individuals or groups of persons have been offering or “preselling” shares of hospitals that are still under construction.
To attract investors, the stocks allegedly grant the buyers certain hospital benefits such as waiver or discounted operating room fees, free or discounted private room, ward and ICU (intensive care unit) accommodations, discounts on use of ICU equipment, medicines, medical supplies and other merchandise, and discounts on hospital services as well as out-patient and in-patient case rates.
Such shares are required to be registered with the SEC under the definition of “securities” in the Securities Regulation Code.
“The public is thus advised to exercise prudence in dealing with any individuals and/or group of persons offering for sale shares of stock in hospitals and urges anyone who has knowledge or information about any transaction involving these securities to report such activity immediately to the commission so that appropriate measures can be taken,” the SEC said.
The advisory was issued in view of recent cases handled by the SEC’s enforcement and prosecution department involving Pacific Global Medical Center Inc. (PGMCI), Diliman Doctors Hospital Inc. (DDHI), South East Asia Medical Inc. (SEAMI) and United Doctors Service Corp. (UDSC).
Of these, PGMCI and DDHI have been issued with a cease-and-desist order while SEAMI and UDSC were penalized for offering unregistered securities to the public in violation of securities laws.
Aside from these entities, the SEC unit believed that “there is a possibility that other hospitals are likewise engaging in the unauthorized offer of their shares of stock.”
Meanwhile, the SEC issued guidelines for the public to consider in buying shares or club membership. The SEC said buyers must verify if the shares or certificates are registered with the SEC; if the broker/salesperson is registered with the SEC; if the issuer is financially sound; if the work development is in accordance with the work program and timetable submitted by the corporation to the SEC; the property on which the golf or club is situated must be in the name of the issuer corporation; if the issuer is only leasing the property where its facilities are located, verify the terms and conditions of the lease contract, and the price of the share/certificate number must be that which is found in the prospectus filed with the SEC.