Brokers at the center of the country's first insider trading case have won a temporary judicial reprieve.
The Court of Appeals (CA) has ordered the Securities and Exchange Commission (SEC) to temporarily halt its investigation of 11 brokers allegedly involved in the price-rigging of gaming group Best World Resources (BW) Corp.
In a five-page resolution, the court's 14th Division said it granted the request of BW stockholder Jimmy Juan, who said that his right to due process had been violated when a report by the Philippine Stock Exchange's (PSE's) compliance and surveillance group (CSG) concluded he was guilty of criminal acts.
"Petitioner has the right against being exposed to embarrassment and emotional trauma attendant to the imputations of criminal liability," the resolution said.
The court order, issued Wednesday, was sought by Juan, who worked for the company owned by Dante Tan, a major BW shareholder and friend of President Estrada. Both Juan and Tan were implicated in trading irregularities in the investigation into BW by the CSG.
News of the court order boosted BW stock, which surged 80 centavos, or 13 percent yesterday to P6.90.
The appellate court said the restraining order was needed to allow Juan's complaints to be reviewed. It explained all prosecutions and investigations must cease, pending a judicial ruling on whether everyone involved had a chance to present his side.
"The sole object... is to preserve the status quo until the merits of the case can be heard and determined," the court order said.
It did not specify how long the restraining order would remain in place.
Several of those implicated in the BW scandal have complained that they were not given a chance to present their side in the PSE probe.
Ruben Ladia, chief of the SEC's prosecution and enforcement division (PED), said they will pursue the filing of a preliminary report on the scandal to the Department of Justice (DOJ), which will decide whether to pursue charges.
Ladia said the partial report would be delivered "first thing tomorrow (today)" despite the issuance of the temporary restraining order.
"We can still pursue the filing of the report because we have neither received the writ of injunction nor have we gotten the notice that the petitioner (Juan) has paid the required P5 million bond," he said.
He added that the writ of injunction would be ineffective unless personally received by the SEC. As of press time yesterday what the CA delivered to the SEC was merely the resolution penned by Associate Justice Eloy Bello Jr.
Outgoing SEC Chairman Perfecto Yasay said yesterday they have already completed a "partial report" on the BW probe, detailing evidence of stock price manipulation against 11 individuals and brokers, as well as recommending the filing of charges against them.
"What the TRO may cover would be the continuation of the investigation," he said.
The SEC said the preliminary probe found evidence of price manipulation of BW's stock, but not of insider trading. Officials said they intend to continue their investigation into possible insider trading.
Investor confidence in the country has plunged as a result of the BW scandal, which includes allegations of attempted cover-ups by the Exchange and by President Estrada.
Yasay has accused the President of pressuring the SEC to find Tan, a contributor to Mr. Estrada's 1998 presidential campaign, not guilty in its probe. The President has strongly denied the accusation.
Investors plowed billions of pesos into BW's stock last year on speculation Macau casino tycoon Stanley Ho would take a stake in the company and transform it into a major gambling force. When Ho did come in, the stock plunged, leaving many investors with huge losses and suspicions that the stock was illegally ramped up.
Meanwhile, former senator and now Rep. Ernesto Herrera (LAMP, Bohol) said the CA should allow the SEC to submit its partial report to the DOJ so that individuals recommended for prosecution can be investigated.
"We should remember that the BW mess had nearly resulted in the collapse of the stock market. So it is important that those behind it be prosecuted immediately," he said. -- By Delon Porcalla