SEC, PSE, PDTC probe Abra Mining

The Securities and Exchange Commission (SEC), The Philippine Stock Exchange, Inc. (PSE) and Philippine Depository & Trust Corp. (PDTC) are working closely together to investigate the trading of unissued and unlisted shares of Abra Mining and Industrial Corporation (AR).

In a joint statement, the three institutions said they also intend to “pursue the necessary actions to protect investors.”

In the meantime, the PSE suspended trading in AR shares since Thursday, March, 4 and until further notice.

Based on disclosures and reportorial submissions by the company, and reports by PDTC, the PSE found that the number of fully paid issued and outstanding AR shares exceeds the number of the company’s listed shares.

This is in contravention of the PSE’s rule that all fully paid issued and outstanding shares should be applied for listing.

It also noted that, the number of AR shares lodged with PDTC exceeds the number of the company’s listed shares, in contravention of the PSE’s rule that only securities approved for listing should be lodged with PDTC for trading.

Finally, it determined that the number of AR shares lodged with PDTC exceeds the number of the company’s issued and outstanding shares, meaning shares which are not yet reflected in the company’s books have been lodged with PDTC and are being traded, in contravention of the provisions of the Revised Corporation Code of the Philippines (RCC).

In a parallel preliminary factfinding investigation, the SEC found that AR had 258.96 billion shares lodged with PDTC as of February 16, 2021. The number exceeds by 186.01 billion shares the 72.95 billion shares the company has listed with PSE.

In its 2019 audited financial statements, AR only reported an issued and outstanding capital stock comprising 99.29 shares.

Records showed that each and every AR share that had entered the PDTC system was confirmed and cleared by the transfer agent for lodgment.

“The SEC, in coordination with the PSE and PDTC, will continue investigating the issue not only to resolve the current incident but also to find system-wide measures to prevent its recurrence,” the statement said.

In the meantime, AR was ordered to submit its proposed actions to address the discrepancies in its issued, outstanding, listed and lodged shares.