Brokerage houses linked to illegal trades of WG&A shares

The Securities and Exchange Commission (SEC) has found evidence linking several brokerage houses to illegal trading activities involving shares of shipping giant William, Gothong & Aboitiz (WG&A).

SEC sources said among the violations spotted by the agency’s Compliance and Enforcement Department (CED) were wash sales or transactions that leave no change in beneficial ownership. There were also violations of the SEC’s rules on order ticket and confirmation of purchases and sales.

The CED has already shortlisted the brokers and their violations for transactions made during the period July 1 to Aug. 2, 2002. However, it has yet to complete its investigation of the case.

The CED is also looking at possible insider trading by WG&A officers considering the unusual increase in volume of WG&A shares traded prior to the disclosure of the sale by the Chiongbian and Gothong families of their combined 61 percent stake in the listed shipping firm.

Shares of WG&A had particularly risen from July 26 to Aug. 1, the day the proposed deal was disclosed to the public. From a closing price of P3 on July 26, WG&A shares kept rising, trading between P3.40 and P3.60 per share during the period.

Aboitiz Equity Ventures Inc. (AEV) chief operating officer Erramon Aboitiz, however, pointed out that neither his company nor his family traded shares of WG&A.

The Aboitiz family completed its buyout of the Chiongbian and Gothong groups’ stake in WG&A last year. The deal involved the transfer of 881.62 million WG&A shares to AEV, thereby increasing the Aboitiz family’s holdings in the shipping firm to 90 percent.

AEV purchased each share for P3.98, amounting to P3.5 billion and represents 58.88 percent of WG&A’s total outstanding shares.

The buyout effectively severed the partnership of the three Cebu-based clans which joined forces in 1996 to form the country’s largest shipping firm.

WG&A is the biggest provider of domestic ferry transportation in the Philippines on both the passenger and cargo business, operating 23 vessels nationwide.

WG&A plans to sell as much as 40 percent of the company to the public in the next three years in line with its plan to allow more investors in the shipping firm.

The company is also studying the consolidation of its transport-related businesses under a single entity.

The SEC is yet to approve the change in the corporate name of WG&A to Aboitiz Transport Group, Inc. (ATG). Shareholders of WG&A had already approved the proposed change in name.

WG&A contributed P159 million to AEV’s bottom line last year. This was 98 percent higher than its P81-million contribution in 2001. Its revenues went up by five percent in 2002, mostly due to higher passenger volume and average rate per passenger.