More settlements seen in BW stock scam

The Securities and Exchange Commission (SEC) expects to receive settlement offers from 30 new individuals who were found to have allegedly participated in the grand scheme to push up the share prices of BW Resources Corp.

Tomas Syquia, head of the SEC’s Compliance and Enforcement Department, refused to name the erring individuals but hinted that they comprised mostly Chinese-Filipino businessmen, officers and directors of BW and several broker firms.

Syquia said the SEC will pursue administrative charges against these individuals should they fail to make settlement offers or pay the assessed penalties.

The 30 individuals are in addition to the 74 persons fined by the SEC for breaching securities rules and law in the course of trading BW shares. The total number of individuals implicated by the SEC will reach over 100.

The individuals were found to have engaged in fraudulent trading activities including wash sales, matched orders, done-thru, marking the close, hyping the stock, and squeezing the float.

Wash sale is a transaction that leaves no change in beneficial ownership while marking the close refers to trades executed at or near the closing time of trading for the purpose of pegging the closing price of shares for the day.

Based on American jurisprudence, marking the close is considered a manipulative device since it gives the impression of an active market for a particular stock. The fines range from P50,000 to P500,000 per count of violation while the jail term shall not be less than seven years and not more than 21 years.

Among those who were earlier charged by the SEC included BW president Eduardo Lim who paid P500,000 in exchange for the dropping of administrative charges, Irene Salud (P500,000), Jimmy Juan (P500,000), Carlos Sy (P408,000), Ramon Lee (P376,000), Jeanette Que (P330,000), Rosemarie So (P312,000), Andrew Sy (P264,000), Oliver Sy (P234,000), David Narvasa (P220,000), Hermogenes Laddaran (P200,000), Antonio Albano (P186,000), Abraham Cordoves (P178,500), Emmanuel Lim (P150,000), Carmelo Santiago (P120,000).

The offers of settlement are allowed under Section 55 of the Securities Regulation Code which states that parties being investigated or charged may propose in writing an offer of settlement with the corporate regulator.

Section 52 of the same law provides that the SEC may consider the offer based on the nature of the investigation or proceeding, the timing and the public interest.

During the years 2000 to 2002, the SEC received a total P21.27 million in settlement offers from individuals and brokerage houses implicated in the BW scandal.

The SEC investigation was spurred by the phenomenal rise in the share prices of BW only P1.98 per share to a peak of P107 per share in just seven months. The shares have since fallen to below P1.

The Department of Justice had earlier found prima facie evidence against Dante Tan, former chairman of BW and a crony of ousted President Joseph Estrada, and several other business executives for violations of the country’s securities laws.

Others charged were Raul de Castro of A.T. de Castro Securities Corp., Federico Galang of PCCI Securities Brokers Corp., Eduardo Co of Aurora Securities, Jimmy Juan, Mario Juan, Hermogenes Laddaran, Eduardo Lim Jr., of Securities 2000 and Belson Securities Inc.

The resolution handed down by the justice department said that "from the very start, Tan was assisted by his associates and co-conspirators… to cause a massive manipulation of the market in BW shares.

As a result of their acts, the DOJ said numerous investors were trickled and deceived into buying BW shares only to lose their investments and suffer damage when the price of the BW shares collapsed for lack of corporate fundamentals to support investments in said shares.