Fraudulent shares trading, violations prompt AR’s PSE delisting

‘The PSE is left with no alternative except to maintain the trading suspension on AR shares and proceed with the initiation of delisting proceedings under its Involuntary Delisting Rules’

Abra Mining and Industrial Corp. (AR) of the Beloy Family will be involuntarily delisted from the roster of public companies at the Philippine Stock Exchange (PSE) after it was found liable for unauthorized and fraudulent trading of unissued and unlisted shares.

“The PSE is left with no alternative except to maintain the trading suspension on AR shares and proceed with the initiation of delisting proceedings under its Involuntary Delisting Rules,” the local bourse operator said in a statement on Tuesday.

Since an involuntary delisting would disadvantage the minority public shareholders, the PSE suggested that they, either individually or by group, consult their counsel and seek legal advice on available remedies under existing laws.

Presently, laws like the Financial Products and Services Consumer Protection Act (FPSCPA) provide financial protection to consumers against fraudulent practices and provide them with an expeditious remedy for the enforcement of claims.

Under the FPSCPA, the Securities and Exchange Commission (SEC) has the authority to adjudicate complaints with damages not exceeding P10 million.

Involuntary delisting

The PSE’s decision to pursue AR’s involuntary delisting was prompted by the decision of the SEC promulgated last 8 April stating that AR violated Section 26 of the Securities Regulation Code (SRC), and Section 61 of the Revised Corporation Code (RCC).

Also found liable were AR President James G. Beloy; corporate secretary Amelia G. Beloy; directors Conde Claro C. Venus, Carmelo Rafael D. Tansengco, Premy Ann G. Beloy, and Joel G. Beloy; and former director Belinda T. Gaskell.

In a separate decision, the SEC also also found AR’s transfer agent, Asian Transfer & Registry Corporation, as well as its president Arline B. Adeva, corporate secretary Premy Ann, assistant corporate secretary Joseph M. Acuesta, and treasurer Joel, guilty of violating Sections 26 and 52.1 of the SRC, and Section 36.4.3.2 of the 2015 Implementing Rules and Regulations of the SRC.

In another decision, the SEC also held several stockholders of Abra Mining, namely Ferdinand U. Collado, Leila V. Collado, and Susan May I. Gacelo, Jubileum Air and Sea Logistics Inc., and Andrei Vincent Freight Services Corp., are liable for violations of Section 26 of the SRC.

Discrepancies

The case stemmed from discrepancies in AR shares lodged with the Philippine Depository and Trust Corp. (PDTC), which were more than the number of listed, registered, issued, and subscribed shares submitted in the company’s filings with the SEC.

AR shares lodged with the PDTC totaled 258,957,666,755, whereas the total number of the company’s listed shares in the PSE was only 72,946,882,574.

Further, the total shares indicated in AR’s latest approved registration statement stood at 95 billion, while the issued and subscribed shares indicated in its corporate documents only totaled 99,294,584,200 and 199,294,584,200, respectively.

Illegal issuances of AR shares totaling 169.05 billion shares covering 474 stock certificates were found to have been made from 2015 to 2019. These illegally issued shares were lodged and traded on the PSE in numerous transactions.