Coyiuto says broker can be elected PSE chairman

The group of Philippine Stock Exchange broker-director Robert Coyiuto Jr. said the Securities Regulation Code provision prohibiting a broker from sitting in the management of the exchange does not apply to the chairman of the bourse.

The Coyiuto group, through their legal counsel Felipe Remollo, said there is nothing in the law that classifies the chairman of a corporation as an officer and therefore Section 33.2 of the SRC does not apply to the chairman of the exchange.

Remollo said only the president, vice-president, secretary and treasurer are regarded as the principal or executive officers of a corporation under the Corporation Code.

Section 25 of the Corporation Code provides that "immediately after their election, the directors of a corporation must formally organize by the election of a president, who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines and such other officers as may be provided for in the by-laws."

The Coyiuto group was reacting to the Securities and Exchange Commission’s position that no broker can ever become a chairperson of the exchange if the corporate watchdog agency was to strictly implement the securities law.

SEC Chairperson Lilia R. Bautista even challenged the Coyiuto camp to elevate their case to the court. The group expressed its disappointment over the decision of the SEC to uphold the appointment of Francisco Villaroman and Rodolfo Cruz, as corporate secretary and treasurer, respectively of the PSE.

As the chief regulator of the securities market, the SEC said it has every right to interpret the law.

Bautista said that should he court rule in favor of the Coyiuto group, the SEC would disqualify any broker intending to run as chairman in the next elections.

The Coyiuto group said the appointment of Villaroman and Cruz violated Section 33.2 of the SRC, which said no officers should be appointed to the exchange unless they have not been connected with a broker, dealer or member of the PSE for two years prior to their appointment.

Villaroman is currently the president of Securitiest Specialist Inc. while Cruz is president of HK Securitist Inc. Both firms are registered brokers and trading participants of the exchange.

The SEC said while it is well aware of the affiliations of the two officers, it believes that their dual responsibilities will not in anyway prejudice their functions in the exchange.

The SEC added that the retention of the two officers is the best option to maintain the stability of the exchange.

Bautista explained that the Commission had interpreted the SRC provision liberally in view of the fact that the exchange is still owned and controlled by the brokers despite a provision in the SRC that requires brokers to divest their shares in the exchange.

Under the law, no business group or industry can own more than 20 percent of the voting rights of the exchange.

In justifying its order, the SEC said Section 33.2 of the SRC does not apply to Villaroman and Cruz because neither the SRC nor its implementing rules and regulations give a clear definition of officers occupying management positions.

The Commission argued that Villaroman and Cruz are not tasked with the day-to-day concerns, management and operations of the exchange and that there are other officers to discharge management functions in the exchange.

The Coyiuto group, however, has found an ally in the person of SEC Associate Commissioner Jesus Martinez, who believes that the law’s provision is clear and must be applied accordingly. Citing the Corporation Code, Martinez, who dissented from the Commission’s majority ruling, said "the task of actual management on the details of business operations and corporate policy are delegated to the officers elected by it and over whom it exercises jurisdiction."