SEC to act on PSE leadership dispute

The Securities and Exchange Commission will decide today on what course of action to take regarding the ongoing leadership crisis at the Philippine Stock Exchange.

The worsening squabble among member-brokers of the PSE forced the postponement of the membership meeting and elections last Saturday due to lack of quorum.

SEC Markets Regulation Department director Jose P. Aquino said he would bring up this matter to the Commission en banc in its meeting today.

SEC Chairman Lilia R. Bautista said earlier the Commission would not hesitate to step in and enforce its regulatory powers if the infighting among PSE brokers continues.

Bautista said last Saturday she was considering creating a management committee to take over the PSE. The management committee, she said, would act as the PSE board to safeguard the interests of the investing public.

Citing the Securities Regulation Code, Bautista said the SEC may take over an exchange if it is deemed necessary to protect the interests of the public.

If the SEC decides to create a management committee, the PSE would, in effect, lose its self-regulatory organization (SRO) status.

Bautista, however, remained hopeful that the squabbling brokers would be able to resolve their differences for the good of the capital market.

The dispute stemmed from the decision of the PSE Nomination and Election Committee (Nomelec) headed by Aquino, to shortlist the nominees for the four independent non-broker positions to only four, leaving the PSE stockholders no other candidates to choose from and effectively allowing the four incumbent directors appointed to retain their positions.

The four incumbents who were appointed as independent directors were Ateneo de Manila University law dean Fr. Joaquin Bernas, PSE president Ernest Leung, and directors Tomas Apacible, former Customs Commissioner andformer socioeconomic planning secretary Cayetano Paderanga.

The group of stockbroker-businessman Robert Coyiuto Jr. and AB Capital Corp. president Filomeno Francisco vehemently expressed their objection to the way the nomination and election process was being dictated by the ruling Yuchengco camp with the blessing of the SEC.

The Nomelec and SEC, however, defended the shortlisting process which they said was in compliance with the circular issued by the corporate watchdog agency in November last year, which provides the basis for selection of independent directors in corporations including the demutualized PSE, in accordance with the Code of Corporate Governance.

Insisting on their rights as stockholders, four candidates associated with the Coyiuto-Francisco group lodged a court suit last week, contesting the merits of the SEC circular, in particular the shortlisting of the four independent directors.

The case will be raffled off today at branch 158 of the Pasig Regional Trial Court.

The SEC, however, said it is prepared to face in court those challenging its decision to appoint independent directors in the PSE board.

Aquino said since the PSE has not yet demutualized, there is no other way to implement the circular, but to appoint the independent directors. He said the Nomelec gave preference to incumbents since this was the instruction of the Commission.