PSE's slow response may prompt revamp

Changes in the board of the Philippine Stock Exchange may be soon be in place after some PSE members questioned the slow response of their leaders to the threatened suspension of trading on Wednesday.

According to some members, PSE president Jose Luis Yulo apparently knew about the suspension order as early as 3 p.m. Tuesday, but did not make any moves to question or defy it.

Some quarters even suspect that Yulo may have tacitly agreed to such a suspension and may even be sympathetic to the call for reforms in the so-called Old Boys Club of the stock exchange.

Sources said that while government officials scrambled to keep the bourse open, the PSE should have taken action against Securities and Exchange Commission (SEC) Chairman Perfecto Yasay Jr. for "endangering the economy."

Yulo appeared at odds with other PSE members during Wednesday's opening and following a breakfast meeting with Finance Secretary Jose Pardo, Trade Secretary Manuel Roxas and Bangko Sentral ng Pilipinas (BSP) Gov. Rafael Buenaventura.

In fact, Yulo refused to talk with reporters after the meeting.

When he hurriedly left the place, there was talk that Yulo may be asked to step down and that he would be replaced by Margarito Teves, a PSE governor.

Meanwhile, congressmen accused Pardo, Roxas and Buenaventura of interfering in SEC's operations.

Rep. Joker Arroyo (LAMP, Makati) said the three had no business meddling in the affairs of the SEC and the PSE.

"That was none of their business," Arroyo said, referring to the decision of the three officials to enforce a SEC resolution and to open the trading at the PSE on Wednesday.

"That should and could have been done by the SEC commissioners who issued the orders. How could and why should the triumvirate act like glorified sheriffs enforcing the SEC resolution?" he said.

He added that what Pardo, Roxas and Buenaventura did amounted to interference in the SEC's operations.

Arroyo pointed out that the functions of the three officials are clear, and that they do not include enforcing a SEC resolution.

He stressed that the threesome had set an "ominous precedent" whereby the Executive Branch, "under the bogey of a crisis or emergency," can meddle with quasi-judicial and independent agencies like the SEC, the BSP, the Energy Regulatory Board, the National Telecommunications Commission, and the Professional Regulatory Commission.

Sharing Arroyo's views, former senator and now Rep. Ernesto Herrera (LAMP, Bohol) said "there is no doubt in my mind that there is interference by Malacañang in the operations of the SEC."

"And that is causing a lot of damage in the stock market and the economy in general," he said.

He urged the Palace to stop such meddling, "or the nation will be in a worse shape than it is now."

He said at present, there are no foreign investors coming in. The situation is exacerbated by the fact that foreign capital is flowing out of the country, he added.

In the middle of these developments, Herrera urged government investigators not to lose sight of the cause of all this mess: the alleged manipulation of BW stocks by presidential friend Dante Tan, BW's majority owner, his associates and several brokers.

He also asked Malacañang not to force SEC Chairman Perfecto Yasay Jr. out of office as this would add confusion to an already confused situation.

For his part, Rep. Oscar Moreno (Lakas, Misamis Oriental) defended Tuesday's decision of Yasay and other SEC commissioners to suspend the PSE trading after members of the PSE compliance and monitoring group had resigned en masse.

He said had the SEC officials not done their job, they could have been charged with dereliction of duty.

He said the PSE should have asked their monitors to return to their jobs or should have put in place an alternative mechanism that would assure the public of the integrity of the trading session.

Moreno, a former bank executive, chided brokers for proceeding with Wednesday's trading despite the lack of a group that would monitor transactions.

"All they are after is profit," he said.

Senior Deputy Minority Leader Sergio Apostol (Lakas, Leyte) said if Yasay can be charged with economic sabotage for issuing an order suspending the trading, Malacañang "is as guilty of that crime for interfering with the SEC."

He also said the root cause of the mess in the stock market is the failure of the PSE's self-regulation and the SEC as a regulatory body.

"I question the SEC's decision to establish a system of self-regulation at the PSE. How can we expect stock brokers to police their own ranks, or investigate the irregularities that they themselves commit? This is the same as asking the banks to police themselves ... or film producers to censors their own films. They cannot be their own regulators," he said.

He suggested that the SEC assume full regulatory responsibility over the stock market.