Court affirms SEC decision


    The Securities and Exchange Commission (SEC) said the Court of Appeals sided with its decision to charge eight shareholders in Calata Corp. with insider trading.

    In a decision promulgated on Sept. 10, 2019, the Special Sixth Division of the appellate court granted the petition for certiorari by the SEC to nullify the resolutions of the Department of Justice (DOJ) that dismissed the complaint and directed the withdrawal of the criminal case filed against eight shareholders — Michael Ilustre Angeles, Carmelo Dela Cruz Bunag, Arnold Ryan Daquis Dellosa, Richie Ramille Isip, Arnold Daquiz Martin, Dennis Philippe Valencia Vistan, Zandro Jose Sigfrido Laki Zulueta and Gary Lincoln Calixtro Taboso.

    “The SEC found Angeles, Bunag, Dellosa, Isip, Martin, Vistan, Zulueta, Taboso and their representatives to have engaged in high-frequency, high-volume buying and selling transactions and several EQ trades, or the transfer of shares from one broker to another, to artificially raise the price of Calata’s shares and make profits in the process, in violation of Section 24 (b) (i) and (iii) of Republic Act No. 8799, or the Securities Regulation Code,” the SEC said.

    “The errant shareholders employed manipulative devices such as “painting the tape” and “hype and dump” immediately after Calata went public on May 23, 2012. The company’s share price had increased by almost 226 percent from P7.35 to P23.95 apiece by June 4, 2012. The shares would begin their downtrend to P12.40 on June 8, 2012,” it added.

    The SEC noted that Angeles, Bunag, Dellosa, Isip, Martin, Vistan, Zulueta and Taboso accounted for 32.95 percent of the shares bought and 38.47 percent of the shares sold during the trading period in question.

    “The errant shareholders traded their respective shares by opening accounts with several brokers,” the SEC said.

    Investigations conducted by the SEC further revealed that Isip, Taboso, Vistan and Zulueta have already been shareholders in Calata prior to the initial public offering. Zulueta was also identified as the chief executive officer of the company’s financial adviser for its maiden offering.

    On June 3, 2014, the DOJ-Task Force issued a resolution finding probable cause that Angeles, Bunag, Dellosa, Isip, Martin, Vistan and Zulueta violated Section 24 (b) (i) and (iii) of Republic Act No. 8799, or the Securities Regulation Code. The same resolution directed the suspension of the proceedings against Taboso and the dropping of charges against the errant shareholders’ representatives.

    A criminal case was accordingly filed against Angeles, Bunag, Dellosa, Isip, Martin, Vistan and Zulueta before the Regional Trial Court in Makati City.

    Only Isip moved for the reconsideration of the DOJ-Task Force’s resolution. Angeles and Zulueta opted to file a motion before the Regional Trial Court in Makati City for determination of probable cause and for the deferment of the issuance of a warrant of arrest against them.

    In nullifying the resolution of the DOJ and reinstating the DOJ-Task Force’s resolution finding probable cause for the indictment of the errant shareholders, the he Court of Appeals said “there is no dispute that CAL (Calata) shares’ valuation and price had increased exponentially during the subject period or that the increase was brought about by the buy and sell transactions done by respondents, who most of the time used the same checkbook for the transactions.”