The Securities and Exchange Commission (SEC) last Wednesday filed a criminal complaint before the Department of Justice (DoJ) against agri-business firm Calata Corp. as a result of the company’s violation of the securities code.
The SEC action followed the move of the Philippine Stock Exchange (PSE) a day earlier to delist the company as a result of multiple violations of disclosure rules.
The PSE also ordered Calata to conduct a tender offer to minority shareholders of the company.
“Please be informed that, following the conclusion of the involuntary delisting involving the company, the exchange issued a decision dated November 3 ordering the delisting of the company’s shares from the official registry of the exchange and imposition of the concomitant penalties under the exchange’s delisting rules,” PSE president Ramon Monzon said in a memorandum.
In its complaint, SEC said the firm violated Section 24 of Republic Act 8799, known as the Securities Regulation Code for making false and misleading statements about the start of the botched Mactan Leisure City project which helped the company boost its share prices at the stock exchange.
SEC Enforcement and Investor Protection Director Jose Aquino filed the complaint against the respondents Calata executives, namely, its president Joseph Calata; chief financial officer Benison Paul De Torres; and board of directors ConradoZablan, Johnny Uy, Halmond Parker Ong, and Edmund Solilapsi.
The SEC official explained the Philippine Amusement and Gaming Corporation (PAGCOR) already turned down Calata’s licensing application since PAGCOR was already operating a casino at Waterfront Hotel and Casino in Mactan, Cebu.
“It is unlawful for any person to make false or misleading statement with respect to any material fact which he knew or had reasonable ground to believe was so false or misleading for the purpose of inducing the purchase or sale of any security listed or traded at the exchange,” said Aquino who cited Section 24 of the Securities and Regulations Code.
Aquino explained Calata had publicly declared that its gaming license for the Mactan Leisure City, a casino and entertainment complex in Cebu, is expected to be released by the end of this year prior to commencing operation in 2020.
He said Calata’s disclosure resulted in a 28.16 percent increase in the price of the firm’s shares and an increase in the volume in the shares traded.
Aquino said if convicted those accused face a penalty ranging from P50,000 to P5 million or imprisonment ranging from seven to 21 years.
Earlier, Calata hoping to fend off its removal from the bourse said it is selling its 81 percent stake to Millennial Global Holdings, Inc. through subscription to its 2.5 billion shares.
Calata said it was also transferring all its assets and liabilities to Agriphil Corp. and/or a private company.
“The transaction intends to transfer the existing agribusiness of Calata Corporation to Agriphil Corporation, a private entity or such other private entity,” Calata said.
Last month, PSE initiated an involuntary delisting for Calata because of its numerous violations on disclosure rules.