THE Securities and Exchange Commission (SEC) has ordered Abra Mining and Industrial Corp. (AR) to pay a total penalty of more than P560 million for the "unauthorized and fraudulent" trading of unissued and unlisted shares from 2015 to 2019.
The firm was found guilty of violating both Section 26 of Republic Act (RA) 8799, or the Securities Regulation Code (SRC), and Section 61 of RA 11232, or the Revised Corporation Code (RCC).
The SEC, through its Markets and Securities Regulation Department (MRSD), said in a statement on Sunday that the mining firm's officers, directors, transfer agent and some stockholders were also found liable.
Section 26 of the SRC prohibits any direct or indirect fraudulent transactions, while Section 61 of the RCC provides that stocks "shall not be issued for a consideration less than the par or issued price thereof."
The commission saw discrepancies in Abra Mining shares that were filed with the Philippine Depository and Trust Corp. (PDTC). The shares were said to have exceeded the total number of listed shares disclosed in the company's regulatory filings.
The 258.96 billion shares lodged with PDTC were higher by more than three times the 72.95 billion shares listed on the Philippine Stock Exchange (PSE).
The SEC added that the shares indicated in the firm's latest approved registration statement totaled 95 billion, but the issued and subscribed shares included in its corporate documents were about 99.29 billion and 199.29 billion, respectively.
"Illegal issuances of AR shares, totaling 169.05 billion ... covering 474 stock certificates, were found to have been made from 2015 to 2019. These illegally issued shares were lodged and traded on the PSE in numerous transactions," the regulator said.
Under the RCC, a stock corporation's board is entrusted with the inherent power to issue or sell stocks as well as the corresponding duty to ensure that the issuance complies with the law.
"Had the officers and directors faithfully exercised their duties as imposed by law, they would have prevented the fraudulent scheme from being carried out," the MRSD stressed, even as it categorically dismissed the officers and directors' admissions of ignorance.
Their actions, it said, "can only be attributable to their gross negligence in the performance of their duties."
The SEC, in a separate decision, also found Asian Transfer and Registry Corp. and its officers liable for the act, which enabled the trading of shares in the stock market.
"The [transfer agent's] actions allowed the [illegal shares] to be lodged and gave them the appearance of being eligible, properly issued shares of AR, thereby inducing investors to buy and trade the [shares]," it said.
The transfer agent also did not furnish a copy of its books and records, the commission said, adding that available records showed discrepancies involving the illegal shares.
"These discrepancies in the records show that the [transfer agent and its officers] changed and omitted key information ... which may be taken as an attempt to cover up the fraud perpetrated with the approval of their lodge."
Stockholders who bought the illegal shares will also be penalized for their participation in the transaction.
The SEC revoked Abra Mining's registration statement and corresponding certificate of permit to sell, while the involved individuals and entities were disqualified from engaging in a registered financial intermediary within a period of five years.
Abra Mining's businesses include the commercial utilization of limestone, lime, shale, silica, sand, gold, silver and other mineral deposits existing within the contract area, although it had not resumed operations as of December 2021, PSE data showed.
Officials of the company were not immediately available for comment.
Shares in Abra Mining last traded at P0.0046 apiece on March 3, 2021.
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