Herbosa turns SEC into political tool



BY describing the Philippines as “among the growing corporate bond markets in the region,” the Securities and Exchange Commission (SEC) did not take into account the implications of its own analysis.

When it attributed “the increasing debt issuances of various Filipino-led companies” to the expansion of “their businesses,” the SEC, led by Chairperson Teresita Herbosa, failed to appreciate the significant role of public investors in developing the country’s capital market.

Not that public investors need the SEC’s help in securing their financial future; they are too rich to deserve government assistance. Yet, as the securities regulator, the SEC’s report that “new debt securities issuances and debt registration has been increasing continuously these past five years,” to say the least, is frightening.

The SEC used the word “continuously” to describe the five-year increase in borrowing, meaning the growth in debt issuances is not about to stop.

Debt market

I am quoting verbatim from the SEC’s annual report so that I would not be accused of twisting it:

“New debt securities issuances and debt securities registration has been increasing continuously these past five years. From 11 corporate issuances in the secondary debt market amounting to P74 billion in 2010, it climbed to 37 new corporate issuances amounting to P191.9 billion in 2014 which represents a significant increase of 159 percent.

Debt securities which comprise of bonds and short-term commercial papers that registered with SEC also showed a substantial increase to P217.6 billion in 2014 from P115.55 billion in 2012 or an 88-percent increase.” (SEC’s 2014 annual report showed P219.4 billion, not P217.6 billion, in total debt securities.)

Again, Due Diligencer invites readers of The Manila Times to focus on the comparative years. Herbosa and the SEC’s four other commissioners compared the expansion of the secondary debt market in 2014 to its performance in 2010. On the other hand, they found it more convenient to compare the amount of registration of debt papers between 2014 and 2012, the only year when they did not report the SEC’s performance at all. As I have been asking often in Due Diligencer, why the omission?

No 2012 SEC report

Yes, since she assumed the SEC leadership in May 2011, Herbosa either forgot or intentionally omitted the SEC’s 2012 annual report from their website, the only one missing in 15 years: that is, from 2000 to 2014. Yet, she and her colleagues who make up the five-person regulatory body, with much less to regulate though, did not use the numbers contained in the 2013 annual report but based the comparison on the 2012 annual filing. Is it because SEC-registered debt securities in 2013 amounted to only P62.40 billion?

Ordinarily, the comparison is based on two succeeding years, or on a year-on-year basis. If this is so, why then did Herbosa and company devise their own formula by comparing the SEC’s debt market report between July 1, 2010, which is an incomplete year, with that of March 2014? A gap of five years between two reports is not reliable at all. They must have something to hide in the years in between.

The answers are found in the report itself, which showed that Herbosa and company tried to score some good points with Malacañang’s temporary tenants led by the chief. Such “good points” translate to only one thing: they have turned the SEC into a political tool and made it subservient to the appointing power.

Politicizing PSE

The group of Herbosa did not spare the Philippine Stock Exchange from their politicizing. Again, as with the debt market, they used the PSE for what appears to be a selfish motive.  What a coincidence that only Herbosa, along with SEC Commissioners Manuel Huberto Gaite, Antonieta Ibe, Ephyro Luis Amatong, and Blas James Viterbo, could come out with an analysis of the performance of the stock market by comparing the Philippine Stock Exchange index or PSEi in mid-2010 to the PSEi five years later.

According to the Herbosa tribe at the SEC, the PSEi “has been increasing by 140 percent from the 3,315.26 level on 01 July 2010 to 7,940.40 level on 31 March 2015.” What a conclusion. That would mean that the public investors and company insiders who chose the right stocks among the 30 companies that make up the major index made a huge gain of 140 percent in five years.

A huge 28 percent yield per annum would make Herbosa and company the best market gurus of all time. They won’t find themselves jobless when their respective seven-year terms expire because the stockbrokers more friendly to them would be waiting to employ them as supreme market prophets.

If the yellow tribe that has invaded the SEC did not intend to please the temporary chief tenant of Malacañang, why then did the SEC’s leadership compare the performance of PSE’s main barometer on “01 July 2010” against that of “31 March 2015”?

Was it a coincidence that the six-year term of Malacañang’s lead occupant started on July 1, 2010? Didn’t the SEC leadership know this? Instead of maintaining the SEC as the securities regulator, Herbosa used her power to convert the agency into a political tool that it should not be. Isn’t the SEC supposed to be apolitical or non-partisan?



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