Businessman Roberto “Bobby” Ongpin is now barred from being an officer of any listed firm and was ordered to pay P17.4 million by the Securities and Exchange Commission, after the regulator found him guilty of insider trading.
In affirming the ruling of the regulator’s Enforcement and Investors Protection Department (EIPD), the SEC en banc said that Ongpin has been found guilty of committing 174 counts of insider trading, a violation of Section 27 of the Securities Regulation Code (SRC).
As a consequence, Ongpin was ordered to pay a fine in the amount of P17.4 million.
In its ruling on the memorandum on appeal filed by Ongpin in March 2015, the agency said that pursuant to Section 54.1 of the SRC, the SEC has further imposed a penalty of disqualification against Ongpin from being an officer, member of the board of directors, or person performing similar functions of any issuer (listed) corporation.
“Mr. Roberto V. Ongpin is hereby ordered, upon the finality of this Order, to relinquish and/or resign from any and all positions he is presently holding as officer, member of the Board of Directors,” the en banc ruling read.
Ongpin is presently the chairman of listed firms PhiliWeb Corp. and Atok Big Wedge Inc.
The SEC found Ongpin guilty of insider trading when he bought Philex shares in 2009, when he was then a minority shareholder of the mining firm, while in possession of nonpublic material information that Hong Kong-based First Pacific Co. would purchase a huge chunk of Philex shares.
“Material information” is deemed “nonpublic” when such information is not readily available to investors concerned.
The facts of the case as found by the SEC revealed that Ongpin acquired his first block of Philex Mining shares from Banco de Oro in 2007. He then acquired additional shares held by John Gokongwei and Manuel Zamora.
On December 2, 2009, Ongpin, through Golden Media Corporation, bought another 50 million shares at P19.25 apiece, from the open market.
In such a short span of time after acquiring more shares, Ongpin sold his 550 million shares for P21 apiece to Two Rivers Pacific Holdings Corp., a subsidiary of Manuel Pangilinan-led First Pacific, thus giving the latter the control over Philex.
In this case, appellant was able to consolidate the required number of shares, supplementing his block of shares with the shares brought from the open market, sold them to the subsidiary of First Pacific at the privately agreed price of P21 per share,” the SEC said in its en banc ruling.
On December 8, 2009, Philex Mining in a disclosure to the Philippine Stock Exchange, announced Ongpin’s exit from the company as director and vice chairman.
With the foregoing facts, the SEC considered Ongpin as an insider trader.
“He clearly was aware of the materiality of the information after he created it by negotiating the selling price of Philex Mining shares at P21 apiece with Pangilinan for the latter to gain control over Philex,” the SEC said.
Despite the imposition of P17.4 million worth of fine against Ongpin, SEC Chariperson Teresita Herbosa earlier admitted to The Manila Times that the agency has no “disgorgement” power against insider traders.
“Under the present SRA, the SEC has only the power over administrative cases, such that we can revoke licenses and/or file criminal charges, and impose a fine when the act committed under the law constitutes a violation or an offense, but we do not have any disgorgement power,” Herbosa said.
‘Disgorgement’ is an action for repayment of wrongful gains that is imposed on violators by the courts. Conversely, the funds or profits that were received through illegal or unethical business transactions i.e., insider trading, are disgorged, or paid back, with interest to aggrieved parties.
She said that with the opening of the 17th Congress, the SEC would ask for a legislative act that would grant the agency disgorgement power that would empower them to recover damages on behalf of the aggrieved parties, which is in line with its thrust to assume a more proactive role in protecting the investing public.