SEC unearths a violation

 

SEC unearths a violation

 

In the petition of Pacific Plans for the transfer of the unsold but registered fixed-value education plans and pension plans issued to Lifetime Plans, the Securities and Exchange Commission (SEC) unearthed a violation on the sale of a big amount of life plans that have not been registered before the commission.

This smacks of a wanton violation of the securities law that the commission is mandated to uphold. It requires the prior registration of securities before these are sold to the public. The rationale here is to ensure that the securities that are being sold to the public passed through a tough scrutiny of the commission analysts and number-crunchers, not only to protect the investing public but also to include the trust fund provision and payment schemes.

This is why, any kind of securities, be it a paper that pays an interest either on a one-time basis or over a period of years or a bond or equity float passes through the strict processing at the commission. Even securities that are considered exempt from registration have to pass through the commission.

Under SEC rules, those securities that are not sold to the public—by public meaning less than 19 persons or institutions—have to go through the process although the securities are considered exempt from registration. One such example was the sale of a paper evidencing tuition and other miscellaneous fees to an Opus Dei-run school south of Manila.

So in the case of the petition of Pacific Plans to allow it to sell the unsold but already registered securities of Lifetime Plans involving P2.561 billion, the commission went through the books of the latter. Documents from the commission show that P481.84 million in fixed-value education plan and P2.080 billion in pension plan were supposedly registered but were not yet sold as of June 2005. It is this amount of registered but unsold securities that Pacific Plans wanted to have at the time the petition was made on September 1, 2005.

The petition sought the transfer of unsold registered fixed-value education plans and the transfer of all fixed-value education plans, pension plans and traditional and fixed-value life plans sold by Lifetime Plans.

Pacific Plans’ request stemmed from the revocation of the certificate of incorporation of Lifetime on May 24, 2005, and the issuance of a resolution in a SEC case denying Lifetime’s petition to lift the order of revocation. In short, since Lifetime had some approvals, Pacific Plans wanted to sell them.

It was in the course of the examination of the books of Lifetime Plans that the commission found out the sale of P50.044 million in life plans that, based on commission findings, were not registered securities. Because of this violation, the company in question was penalized with a huge P100,088.04. The SEC documents revealed that the penalty was computed at P50.044 million worth of unregistered but sold life plans times 0.002.

We understand that the penalty was paid on August 15, 2005, under OR 0005290848. What is perplexing though about the whole episode is that, based on SEC documents, Lifetime is supposed to have been stripped of its corporate status on May 24, 2005. So how could it have sold the unregistered securities involving life plans? Remember that the amount of supposed unsold but registered securities was reckoned as of June 2005. So what entity actually sold the unregistered life plans?

Quijano de Manila

A forum to present the opposing views on the issues gripping the nation is being planned as part of an envisioned Quijano de Manila Foundation aimed at honoring the late Nick Joaquin, National Artist for Literature. Mr. Joaquin (from which jumbled letters Quijano was taken, similar to the nom de plume “Plaridel” of del Pilar) is a prolific writer who counts the late Ernest Hemingway among his friends. The foundation is a brainchild of Ambassador Antonio Cabangon-Chua who wanted to perpetuate the memory of the literary giant.

As conceived, the forum would invite experts to talk on their field of study before an audience who would then discuss the issues raised, ask questions and even advance their opposing views. With this exchange of ideas, there would be a synthesis that would prove beneficial to all concerned. There is a different format for the forum which is scheduled to be held monthly at Alba’s in Cherry Blossom Hotel on Jorge Bocobo Street in Malate.

E-mail: hugagni@yahoo.com

http://www.businessmirror.com.ph/01182007/opinion05.html