Set­ting an ex­am­ple

Philippine Daily Inquirer - - OPINION -

In a dis­play of its self-reg­u­la­tory pow­ers, the Philip­pine Stock Ex­change is im­pos­ing on a listed com­pany the harshest penalty in its ar­se­nal—delist­ing. The bourse made known last week its de­ci­sion to start the in­vol­un­tary re­moval of Calata Corp. from the ros­ter of com­pa­nies whose shares are pub­licly traded. In a no­tice to the in­vest­ing pub­lic, the PSE an­nounced that it was delist­ing Calata for 55 vi­o­la­tions of the Re­vised Disclosure Rules of the Ex­change from Oct. 6, 2016, to June 20. Specif­i­cally, the PSE said Calata had 29 vi­o­la­tions of Sec­tion 13.1 of its disclosure rules from Nov. 29, 2016, through June 20. It also counted 26 other vi­o­la­tions of sec­tion 13.2 of the same rules from Oct. 6, 2016, to March 16, and from April 26 to May 2. Th­ese mainly re­lated to the nondis­clo­sure of in­for­ma­tion that could in­flu­ence the price of its shares.

Calata now joins Alphaland Corp. and Uniwide Hold­ings Inc., com­pa­nies that have been delisted or are be­ing delisted for vi­o­la­tions of the PSE’s disclosure rules.

Calata has ac­tu­ally been un­der a trad­ing sus­pen­sion since June 30, af­ter it was dis­cov­ered that the agri­cul­ture prod­ucts com­pany did not im­me­di­ately dis­close trades made by its chair, CEO, pres­i­dent and owner, Joseph Calata. The com­pany sim­ply blamed the late disclosure to a staff mem­ber of the owner who al­legedly mis­un­der­stood in­struc­tions to in­form the PSE and in­stead filed the trad­ing re­port in the com­pany’s in­ter­nal records. Pre­sented with such a flimsy ex­cuse, the PSE im­posed a onemonth trad­ing sus­pen­sion af­ter not­ing that Calata had vi­o­lated the so-called black­out rule, which bans di­rec­tors and prin­ci­pal of­fi­cers who have learned of cer­tain ma­te­rial in­for­ma­tion that could in­flu­ence the price of their stocks from trad­ing their shares within a pre­scribed pe­riod. In short, its of­fi­cers may have en­gaged in in­sider trad­ing ac­tiv­i­ties.

How­ever, the sus­pen­sion was up­graded on July 24 to the start of the delist­ing process af­ter the PSE, un­der its disclosure rules, noted that vi­o­la­tions af­ter the third of­fense al­ready con­sti­tuted grounds for delist­ing, which car­ries se­vere con­se­quences. Ac­cord­ing to the PSE, a delisted com­pany can­not relist within the next five years. Its di­rec­tors and ex­ec­u­tive of­fi­cers would also be dis­qual­i­fied from be­com­ing di­rec­tors or ex­ec­u­tive of­fi­cers of any com­pany ap­ply­ing for list­ing within the same pe­riod.

But in the spirit of fair­ness, the PSE is giv­ing Calata “the op­por­tu­nity to ex­plain its side by sub­mit­ting a Me­moran­dum or Po­si­tion Pa­per and by par­tic­i­pat­ing in a hear­ing specif­i­cally sched­uled for this pur­pose.”

Calata is not new to con­tro­versy. It al­ready had a bumpy re­la­tion­ship with reg­u­la­tors since it went pub­lic in 2012. Shortly af­ter its list­ing, it was em­broiled in a stock ma­nip­u­la­tion scan­dal that trig­gered an in­ves­ti­ga­tion by the Se­cu­ri­ties and Ex­change Com­mis­sion, which even­tu­ally charged at least 12 peo­ple with “anoma­lous” trad­ing of shares and con­spir­ing to “in­ten­tion­ally and un­law­fully” raise share prices for their own profit. The in­ves­ti­ga­tion was trig­gered by P4 bil­lion worth of trans­ac­tions dur­ing a two-week pe­riod af­ter the com­pany’s list­ing that brought Calata share prices spi­ral­ing to un­prece­dented highs.

From a live­stock sup­ply chain busi­ness, Calata last year also planned to di­ver­sify into prop­erty and gam­ing through a $1.4-bil­lion ven­ture in Cebu with Sino-Amer­ica Gam­ing In­vest­ment Group and Ma­cau Re­sources Group Ltd. But the talks col­lapsed early this year.

The PSE move on Calata should serve as fair warn­ing to other listed com­pa­nies that at times in­ten­tion­ally de­lay the disclosure of ma­te­rial in­for­ma­tion that can af­fect the prices of their stocks. This has put the in­vest­ing pub­lic at a disad­van­tage. The PSE is prov­ing that a self-reg­u­la­tory or­ga­ni­za­tion can ac­tu­ally put the pub­lic’s wel­fare above cap­i­tal­is­tic in­ter­ests. In the case of Calata, The PSE has shown that it is truly de­serv­ing of such SRO sta­tus.

THE PHILIP­PINE STOCK EX­CHANGE IS IM­POS­ING ON A LISTED COM­PANY THE HARSHEST PENALTY IN ITS AR­SE­NAL—DELIST­ING. CALATA CORP. NOW JOINS ALPHALAND CORP. AND UNIWIDE HOLD­INGS, COM­PA­NIES DELISTED OR BE­ING DELISTED FOR VI­O­LA­TIONS OF THE PSE’S DISCLOSURE RULES

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