SEC stands pat on Nomelec rules

MANILA, Philippines -  The Philippine Stock Exchange (PSE) has maintained that its Nominations and Elections Committee (Nomelec) committed no wrongdoing and that the matter regarding the board elections was a “question of interpretation.”

PSE president Hans Sicat issued this statement in response to the Securities and Exchange Commission’s decision to impose a P1-million fine on the bourse for the Nomelec’s failure to follow its own rules in qualifying candidates for the PSE board of directors in the annual election held last month.

“I think our Nomelec has acted professionally. They were doing their job and they were following the rules. The SEC will have to decide. It’s a question of interpretation,” Sicat said.

“We’re appealing the fact that somewhere in the middle, they started changing the interpretation of the rules. That’s the issue,” he added.

The imposition of the penalty stemmed from an investigation conducted by the SEC which showed that Nomelec failed to conduct diligent screening of eight candidates by declaring them qualified even though the company or brokerage firm they represent “had violated various provisions of the PSE rules and the Securities Regulation Code.

According to the SEC, the Nomelec had no basis to declare that the subject firms have been compliant with the SEC rules for the preceding year since it has yet to secure the certification from the corporate watchdog’s Corporation Finance Department.

Sicat, however, emphasized that under the rules, broker firms are given time to cure their deficiency.

“Our rules say when you violate, there’s a cure period. if you cure your default after submitting the right paperwork, by paying the monetary fine, by curing it then you’re in compliance and put back in good standing. That’s how the rules work,” he said.

“We’re trying to be as cooperative as possible and were trying to explain that’s what happened.

It’s really a simple issue. We’re appealing that they don’t fine for us,” Sicat further said.

The SEC said the PSE Nomelec ignored the violations committed by candidates representing San Miguel Corp.,The First Resources Management and Securities Corp., Vantage Securities, Summit Securities, RTG & Co Inc., Lucky Securities, IGC Securities and

Asia Pacific Capital Equities and Securities Corp.

The PSE, however, said the candidates had submitted certificates from the SEC-MRD that the brokerage firm they represent had valid licenses and had been compliant with the PSE and SEC rules.

But the SEC stressed that while broker-candidates have valid licenses, this does not mean they are already compliant with the SEC and/or PSE rules.

The SEC explained that its certifications indicate that these brokers are authorized to operate as PSE trading participants and had no outstanding liabilities but the certifications also noted that these brokers had certain violations.