The Securities and Exchange Commission (SEC) said that the Department of Justice (DOJ) has indicted Abra Mining & Industrial Corp. (AR), along with its directors, officers, transfer agent, and certain stockholders, for unauthorized and fraudulent trading of shares from 2015 to 2019.
Based on the SEC’s recommendation, the charges were issued through a resolution dated August 12, in which state prosecutors said they found “prima facie evidence with reasonable certainty of conviction” to charge AR with violations of the Securities Regulation Code (SRC) over the illegal trading of company shares.
Charged were AR officers James G. Beloy, Amelia G. Beloy, Premy Ann G. Beloy, and Joel Albert G. Beloy; the company’s stock transfer agent, Asian Transfer & Registry Corporation; and stockholders Joseph M. Acuesta, Andrei Vincent Freight Services Corp., Jubileum Air and Sea Logistics Inc., Ferdinand U. Collado, Leila Collado, and Susan May I. Gacelo.
The SEC filed a criminal complaint with the DOJ in May last year after discovering that AR had issued shares in excess of those registered with the SEC and listed with the Philippine Stock Exchange (PSE). These excess shares were traded on the PSE upon lodgment with the Philippine Depositary and Trust Corp. (PDTC).
An investigation by the SEC’s Markets and Securities Regulation Department revealed that the number of AR shares recorded in the PDTC had reached 258.96 billion as of February 2021. However, the registration statement rendered effective by the SEC covered only 95 billion shares, and only around 72.95 billion shares were authorized for listing on the PSE.
The PDTC record also reflected 99.29 billion issued shares and 199.29 billion outstanding shares, as indicated in AR’s financial statements.
“It can be gathered from [AR’s] reported shares…that [the company] knew of the existence of its unregistered shares, considering the declarations made in the aforementioned public documents, which Abra submitted as part of its reportorial requirements,” the SEC said, citing the DOJ resolution.
The DOJ noted that the circumstances surrounding the unregistered shares from 2015 to 2019 appear to follow “a specific scheme designed to defraud or deceive the public into investing in worthless securities.”
“The scheme involved AR entering into transactions with respondents Leila and Ferdinand Collado, Gacelo, Jubileum Air and Sea Logistics, and Andrei Vincent Freight Services involving unregistered or over-issued shares. These shares were sold below par value and were not fully paid,” the SEC added.
“Despite failing to pay for the shares, AR proceeded with the issuance of the corresponding stock certificates in favor of the aforementioned persons and entities. These unregistered shares were facilitated and validated by Asian Transfer, and were then lodged with PDTC through their respective brokers,” it said.
The unregistered shares were eventually traded or circulated to the investing public under the guise of legitimately issued shares, resulting in substantial monetary gains for the respondents.
“[Leila and Ferdinand Collado, Gacelo, Jubileum Air and Sea Logistics, and Andrei Vincent Freight Services] are deemed to have connived with [AR] and its responsible officers in perpetuating the fraud… Without their accommodation, the grand scheme of circulating worthless securities to the public would not have materialized,” the resolution stated.
The DOJ also pointed out that Asian Transfer failed in its duty to monitor the issuance of AR shares: “Records show that Asian Transfer repeatedly confirmed the lodgment of unregistered shares despite overwhelming indications that [AR] had already exceeded its authorized registered/listed shares. By its omission and acquiescence, Asian Transfer facilitated the fraudulent transactions involving the unregistered shares.”
Prior to the filing of the complaint, the SEC had already imposed fines totaling more than P560 million on AR, its directors, officers, transfer agent, and certain stockholders for the unauthorized trading activities.
All officers and directors of AR and its transfer agent, as well as the implicated stockholders, have also been disqualified from serving as officers, directors, or persons performing similar functions for any issuer of registered securities.
“The indictment of AR, its officers, stock transfer agent, and stockholders marks a vital step in upholding trust and confidence in our capital market,” SEC Chairman Francis Lim said.
“The SEC remains steadfast in its commitment to hold accountable any entity found to have violated that trust, and to ensure they are brought before the proper venues to answer for their actions,” he added.
