TRO vs SEC on Ongpin insider trading case
THE COURT of Appeals has issued a temporary restraining order against the implementation by the Securities and Exchange Commission (SEC) of heavy sanctions against businessman Roberto V. Ongpin for alleged insider trading.
In a ruling dated Aug. 1, the CA ordered the SEC to suspend the implementation of its fines and penalties against Ongpin for 60 days. A hearing has been set to determine whether a preliminary injunction is warranted on Aug. 23 and 24.
The SEC earlier slapped Ongpin with a P174-million fine for allegedly using insider information to profit from the trading of Philex Mining shares in 2009, when the First Pacific group was still scrambling to gain a controlling stake in the mining firm. This is the first and only case of insider trading so far decided by the SEC en banc under the Securities and Regulation Code (SRC).
Apart from the monetary penalty, SEC also disqualified Ongpin from holding any post as officer or member of the board of directors of any issuer corporation.
Ongpin has decried the insider trading charge against him as “erroneous” and “grossly unfair.”
In explaining the TRO, the CA said: “The damage to be suffered, if any, is not quantifiable in terms of monetary value and cannot be remedied under any standard compensation.”
“In so ruling, we considered not the amount of fine imposed upon Ongpin but the penalty of disqualification and the order for him to relinquish or resign from the positions of director or officer, the extent of which affects not only the company Philex but all other public and publicly listed corporations,” the CA said.
The SEC said Ongpin was liable for 174 counts of insider trading in violation of the SRC. It slapped the maximum fine of P1 million for each of the 174 transactions.
The questioned transactions pertained to Ongpin’s purchase of additional shares of Philex ahead of a Dec. 1, 2009 private agreement he had entered into with Pangilinan. During then, Ongpin was able to consolidate the required number of shares – supplementing his block of shares with the shares brought from the open market – and sold them to the subsidiary of First Pacific at the privately agreed price of P21 per share, thereafter giving the First Pacific group control over Philex.
But Ongpin lamented that the SEC had wanted him to disclose the price at which Pangilinan had agreed to buy his Philex shares before the start of trading on Dec. 2, 2009 when the deal with had been finalized only in the evening of Dec. 2.
Sec. 27 of the Securities Regulation Code prohibits an insider from buying or selling a security of the issuer, while in possession of material information with respect to the issuer or the security that is not generally available to the public.
Under the law, an insider could be the issuer, director or officer or a person controlling the issuer, a government employee, director or officer of an exchange, clearing agency and/or self-regulatory organization who has access to material information not available to the public or any person who learns such information by communication from any forgoing insiders./rga