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SecuritiesRegulationR.A. 8799Atty. Justina F. Callangan
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Declaration of State Policy
establish a socially conscious, free
market that regulates itselfencourage the widest participation
of ownership in enterprises
enhance the democratization of
wealth
promote the development of the
capital market
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Declaration of State Policy
protect investors
ensure full and fair disclosure aboutsecurities
minimize if not totally eliminate
insider trading and other fraudulent
or manipulative devices andpractices which create distortions in
the free market
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Powers and Functions of the
SEC
regulatory
adjudicatory
SEC has the incidental power to conductadm. hearings and make decisions in thecourse of the performance of itsregulatory and law enforcement
functions.
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If a case requires decision orresolution of a violation or conflict
brought about in connection with the
performance of a regulatory function,
then it is one for the SEC to decide forthe best interest of the public. But if
the case is adversarial in nature,
which calls for the adjudication of
private rights and obligations, then the
question is for the regular courts to
decide.
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SRC
1. Has jurisdiction and supervision
over all corporations, partnerships
or associations who are grantees
of primary franchises and/or a
license or permit issued by the
govt;
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Validate the transfer of securities by book-
entries rather than the delivery of physical
certificates;
Establish when a person acquires a security
or interest therein and when delivery of asecurity to a purchaser occurs;
Establish which records constitute the best
evidence of a persons interests in a
security and the effect of any errors in
electronic records of ownership;
Sec. 47
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Codify the rights of investors who choose
to hold their securities indirectly thru a
registered clearing agency and/or other
securities intermediaries;
Codify the duties of securitiesintermediaries (including clearing
agencies) who hold securities on behalf of
investors; and
Sec. 47
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Give 1st priority to any claims of a registered
clearing agency against a participant
arising from a failure by the participant to
meet its obligations under the formers rules
in respect of the clearing and settlement oftransactions in securities, in a dissolution of
the participant and any such rules and
regulations shall bind the issuers of securities,
investors in the securities, any third partieswith interests in the securities and the
creditors of a participant of a registered
clearing agency.
Sec. 47
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May audit the FS, assets and otherinfo of a firm applying for registration
of its securities whenever it deemsnecessary to insure full disclosure orto protect the interests of the
investors and the public.
Sec. 8.5
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SRC
2. Formulate policies andrecommendations on issues concerning
the securities market, advise Congressand other govt. agencies on allaspects of the market and proposelegislation and amendments thereto;
3. Approve, reject, suspend, revoke orrequire amendments to RS andregistration and licensing applications;
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SRC
4. Regulate, investigate or supervise theactivities of persons to ensure
compliance;5. Supervise, monitor, suspend or take over
the activities of persons to ensurecompliance;
6. Supervise, monitor, suspend or take overof exchanges, clearing agencies andother SROs;
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SRC
7. Impose sanctions for the violation of lawsand the rules, regulations and orders
issued pursuant thereto;
8. Prepare, approve, amend or repealrules, regulations and orders, and issueopinions and provide guidance on and
supervise compliance with such rules,regulations and orders;
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SRC
9. Enlist the aid and support of and/ordeputize any and all enforcement
agencies of the govt., civil, military aswell as any private institution, corp., firmassociation or person in theimplementation of its powers and
functions under the Code;10. Issue CDO to prevent fraud or injury to
the investing public;
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SRC
11. Punish for contempt of the Commission,both direct and indirect, in accordance
with the pertinent provisions of andpenalties prescribed by the Rule ofCourt;
12. Compel the officers of any registered
corporation or association to callmeetings of stockholders or membersthereof under its supervision
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SRC
13. Issue subpoena duces tecum and summonwitnesses to appear in any proceedings of the
Com. and in appropriate cases, order theexamination, search and seizure of alldocuments, papers, files and records, taxreturns and books of accounts of any entity or
person under investigation as may benecessary for the proper disposition of thecases before it;
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SRC14. Suspend or revoke, after proper notice and
hearing the franchise or certificate of
registrations of corps., partnerships or asso.,upon any of the grounds provided by law;and
15. Such other powers as may be provided bylaw as well those which may be implied from
or which are necessary or incidental to thecarrying out of, the express powers grantedthe Com. to achieve the objectives andpurposes of these laws.
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Securities required to be
registered
1. Exempt securities (Sec. 9, SRC)
a. any security issued or guaranteed bythe
govt of the Phil or by any pol. subd.or agency thereof or by any personcontrolled or supervised by , and
acting as an instrumentality of saidgovt.
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Securities required to be
registered
b. Any security issued or guaranteed
by the
govt of any country with which
the Phil. maintains diplomatic
relations or by any state, province
or pol. subd. thereof on the basisof reciprocity
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Securities required to be
registered
c. Certificates issued by a receiver or by atrustee in bankruptcy duly approved by
the proper adjudicatory bodyd. Any security or its derivatives the sale or
transfer of which , by law, is undersupervision and regulation of the OIC,HLURB or the BIR
e. Any security issued by a bank except itsown shares of stock
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Securities required to be
registered
f. Any evidence of indebtedness
issued by a financial institutionitself that has been licensedby the BSP to engage inbanking/quasi-bankingactivity
Rule 9, SRC
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Securities required to be
registered
g. Evidence of indebtedness issued to theff primary institutional lenders:
Banks including their trust accounts whereinthe trustee is granted discretionary powersin the investment disposition of the trustfunds
Investment houses including their trust
accounts wherein the investment house-trustee is given discretionary powers in theinvestment disposition of the trust funds
Rule 9, SRC
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Securities required to be
registered
trust companies
financing companies investment companies
pre-need companies
non-stock savings and loanassociations
building and loan associations
Rule 9, SRC
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Securities required to be
registered
Rule 9, SRC
venture capital corporations
insurance companies
govt. financial institutions
pawnshops
pension and retirement funds approved by
the BIR
edu. assistance funds established by thenatl. govt
other entities that may be classified as PIL
by the BSP, in consultation with the SEC
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Securities required to be
registered
Rule 9, SRC
provided all such evidence ofindebtedness shall only be negotiated or
assigned to any of the above PILs or theDBP with respect to private dev. banks inrelation with their discounting privileges
that in case of non-banks without
underwriting licenses, such negotiation orassignment shall be thru banks or non-banks licensed to be an underwriter or asecurities dealer
R l 9 SRC
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Securities required to be
registered
Rule 9, SRC
that in no case shall said instrument benegotiated or assigned to non-qualified
buyersh. Bills of exchange arising from a bona fide
sale of goods and services which are
distributed and/or traded by banks or
investment houses duly licensed by SECand BSP thru an organized market
properly conventioned and governed by
rules approved by the appropriate
regulatory body
R l 9 SRC
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Securities required to be
registered
Rule 9, SRC
i. Evidence of indebtedness (short andlong term) meeting the ff. conditions:
issued to not more than 19 non-institutional lenders
payable to a specific person
neither negotiable nor assignable and
shall be held on to maturity
in an amount not more than P50M
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Securities required to be
registered
2. Exempt transactions sale of any
security in any of the ff.transactions:
a. At any judicial sale, or sale byan executor, administrator,
guardian or receiver or trusteein insolvency or bankruptcy
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Securities required to be
registered
b. By or for the amount of a
Pledge holder or
Mortgagee or
Any similar lien holder
Selling or offering for sale or delivery inthe ordinary course of business andnot for the purpose of avoiding theprovisions of the SRC
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Securities required to be
registered
c. Isolated transaction
Sale is made by the owner itself(available to issuer as an owner(thereof))
Not made I the course of repeatedand successive transaction of a like
character The said owner is not the underwriter
of the security
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Securities required to be
registered
d. Stock dividend declarations
e. Sale of shares to stockholderswhere no commission or otherremuneration is paid directly orindirectly
f. Issuance of bonds secured bymortgage upon real estate ortangible personal property to asingle purchaser
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Securities required to be
registered
g. Transaction pursuant to a right
of conversionh. Brokers transactions
i. Pre-incorporation subscription
or subscription to a capitalincrease
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Securities required to be
registered
j. Exchange securities by the
issuer with its existing securityholders where no commissionor other remuneration is paiddirectly or indirectly forsoliciting for such exchange
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Securities required to be
registered
k. private placements (not more
than 19 non-qualified (retail)buyers
l. sale to any number of
qualified buyersBank
Registered investment house
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Securities required to be
registered
Insurance company
Pension fund or retirement planmaintained by the Govt of the Phil.
or any pol subd. thereof or
managed by a bank or other
persons authorized by the BSP toengage in trust functions
Investment company
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Securities required to be
registered
such other persons the SEC may be
rule determine on the basis of
financial sophistication
networth
knowledge and experience in
financial and business matters or
amount under management
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REGISTRATION OF SECURITIES
1. Definition2. Legal Basis Section 8, SRC
3. Public Offer Defined
Via Publication
Presentation in a Public or Commercial place
Radio, TV ads or in any online/email system
Distribution or making available flyers or any offeringmaterials in a public or commercial place or mailing the
same to prospective purchasers
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Issues relative to Public Offers No instruments are issued but deposits are accepted Repackaged (securitized registered instruments)
4. Merit vs. Full Disclosure Regime Approval Rendered Effective
5. When Does disclosure begin and end?Begins at registrationContinues periodically thru periodic reportsMay be suspended when on the 1st day of the
fiscal year, it has less than 100shareholders (SRC Rule 17.1(1)
Does not end once a reporting company, itremains
as such even when registration ofsecurities has been revoked (SRC
Rule13(5) EPD revocation of primary license except
hosp./edu. inst.
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6. Reporting Companiesi. Registered Issuers
ii. Listed Companies
iii. Public Companies
at least P50M total assets
at least 200 shareholders, each holding at least 100shares
PVB Case (SC affirmed CFDs position that it is apublic co. but penalties were ordered to be reckonedfrom the time the bank was first notified of the
violation. Its on appeal with the SC) Hospitals/ educational institutions different scale of
penalties
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SEC Form 17-EX - number of holders is reduced to 100every beginning of the FY stops after
90 days from notice
7. Registration Requirements(Substantive/Procedural)
i. Legal basis of Registration Sec. 8, SRC
ii. Legal basis for Registration Requirements
Sec. 12, SRC, SRC Rule 12 Sec. 68.1
AnnexC
Various SEC Orders/Memo. Circulars
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iii. What to Register?
Shares to be Offered to the Public All issued and outstanding shares if
Registrant is going IPO
Going listing by way of Intro.
Public co. going IPO/LBWI
Sec Cert re: adoption of a Manual of Corp. Governance Manual of Corp. Governance
Others depending on the type of securities being registered, i. e.,
- committed credit line
- rating
- ECC
- TCT- House/membership rules
- Notarized undertaking to refund investments
iv. Shelf-Registration - defined
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8. The Registration Statementi. Contents
Cover Sheet Part I Info required into the Prospectus
Risk Factors Use of Proceeds Risk Disclosure Statement
- General Risk Warning
- Prudence Required- Professional Advice Determination of offer price Dilution Selling security holders Plan of distribution Other distributions
Underwriters compensation Underwriters rep. to the board Designated shares and allocations Brokers/dealers compensation Finders
Interest of named experts and independent counsel
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Info with respect to registrant Business
- Business Development- Business of the Issuer
- major risks involved in each business of the companyand subsidiaries; procedure on how to identify, assess andmanage such risks
- additional requirements
Properties
Legal Proceedings
Market for Issuers common equity and relatedstockholdersmatters
- market info
- holders
- dividends
- recent sales of unregistered or exempt securities,incl. recent issuance of securities constitutingexempt transactions
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MD & A and Plan of Operation
Changes in and disagreements w/ accountant on
acctg. and financial disclosures External audit fees
Directors and Executive Officers- Significant Employee/s
- Family Relationships
- Involvement in certain legal proceedings
Executive compensation
Security Ownership of certain record andbeneficial owners
Security ownership of management Voting trust holders of 5% or more
Certain relationships and related transactions
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ii. Rejection / Forfeiture of Fees
iii. Refund of Fees
Letter-request
CFD endorses it to FMD with recommendation
CFD presents it to en banc
Application to future fees/penalties
Maximum 50% of the fees paid
iv. Disclosures Required after RS is rendered effective (mostneglected) SEC Form 23-A
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Persons required 10% beneficial owner of anyclass of any security or director (even if onlyqualifying share is owned) or officer (even if
he has no security at all) after becoming such
Due date within 10 days after the effective dateof the RS or after he becomes suchsubsequent to the effective date of the RS
whichever is earlier
First SEC Form 17-Q either within 45 days afterthe effective date of the RS or on or before thedate on which such report would have beenrequired to be filed if the issuer had beenrequired previously to file it whichever is later
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Within 3 days from closing of the sale
i. dispositions of secondary shares
number/percentage
ii. disclosure on over-allotment
Wide Dissemination (Sec. 8.3)
i. Each participants (underwriters,brokers)
ii. Main & EOs of the SEC
iii. Exchange if to be listed
iv. 20 or more persons (non QBs)
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v. Amendments when on the face of the RS, it is incomplete,
inaccurate in any material respect, i.e., any event or transaction which increases and creates a risk on the
investments or on the securities covered by it
increase/decrease in the volume of securities
issue price is outside of the range
major change in the primary business
reorganization of the company change in the work program or use of proceeds
loss, deterioration or substitution of the property underlying thesecurities
significant or 10% or more change in the financial condition or resultsof operation of the registrant
classification/declass or reclass of securities which results inderogation of rights
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Requirements
File ARS
Notice for publication (changes and reason for thechanges)
Offer to rescind all transactions
Investors may renounce their purchases within 30 daysfrom notice
Return of investments (w/o any deduction) within 10days from notice (in Subic Bay Golf vs. SEC, the SCdecided that the SEC cannot order a refund ofinvestments. The power belongs to the regular courts)
Filing fee min. of P10K (if volume is increased, 1/10 of
1% of the difference)Deviation from the use of proceedsRequired: Prior notice to SEC and stockholders 30 days from
implementation
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9. Periodic Reportsi. Annual
Due date depends on where it is filed (for 2009 AFS filings)
Extension Office April 14/15
Main Office per MC depends on the last numerical digitof the filers SEC Reg. No.
For 2011 Filings
April 14, 15, 18, 19,20 - 1 & 2
April 25 29 - 3 & 4May 9 13 - 7 & 8
May 16 20 - 9 & 0
Those with FY other than Dec. 31 original filing schedule
Filings of any company may be made before April 18Late filings allowed starting May 23 and shall be subject to penalty
computed from the date of the last day of filing schedule above.
No SEC form 17-L allowed
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POST-REGISTRATION DISCLOSURES
Via Periodic Reports/Other Forms
1. SEC Form 17-A
2. SEC Form 17-Q
3. SEC Form 17-C
4. SEC Form 17-Ex
5. SEC Form 17-L
6. SEC Form 18-A
7. SEC Form 18-AS
8. SEC Form 23-A
9. SEC Form 23-B
10. SEC Form 20-IS
11. SEC Form 19
12. SEC Form 10-1
13. For SOP/SPPs - annual report of optionees/purchasers & shares purchased
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Tender Offer Report
At least 35% acquisition in a single transaction TO to all holders; if
oversubscribed, distributed pro rataAt least 35% acquisition within 12 mos. - to all holders of such class for
the number of shares so acquired within the said period. The lastsale meeting the threshold shall not be consummated until theclosing and completion of the TO.
Less than 35% acquisition but the acquisition will result in ownership ofover 51% of the total outstanding equity shares TO to allremaining shareholders at a price supported by a fairness opinionprovided by an independent financial advisor or equivalent 3rdparty Acquirer is required to accept all securities tendered.
Sale of shares pursuant to a private transaction shall not be completedprior to closing and completion of the TO. (exemptive relief isavailable)
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OTHER OBLIGATIONS
i. Post-IPO issuances
if sold under SRC Rule 10.1 SEC Form 10-1 must befiled as a notice for k (private placement or to 19 orless non-qualified buyers) and l transactions (to anynumber of qualified buyers) or as a request for
confirmation of exemption
sold to shareholders but with cost registrable
if sold anew to the public (more than 19 non-qualified buyers), registrable
Exemption may be obtained pursuant to SRC Rule10.2 for issuances to more than 19 non-qualifiedbuyers (limited offer/small amount)
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Qualified buyers under Sec 10.1(l)
bank registered IH
insurance company
pension fund or retirement plan maintained
by the GOP or any pol. Subdivision thereofor managed by a bank or other personsauthorized by the BSP to engage in trustfunctions
such other persons as the Com. may by rule
determine on the basis of financialsophistication, net worth and experience infinancial and business matters or amount ofassets under mgt.
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Qualified buyers under SEC MC No. 6, s. of 2007
Individualsi.has a min. AGI of P25M for at least 2 yrs prior to regis. or
ii.a total portfolio investment in securities registered with theCom. of at least P10M or
iii.a personal net worth of not less than P30M and
been engaged in securities trading, in his personalcapacity or thru a FM, for a period of 1 yr. or
held for at least 2 yrs. a position of responsibility inany professional or business entity that requires
knowledge or expertise in securities trading, suchas legal consultant, financial adviser, sales personor associated person of broker-dealer or finance,treasury or trust officer of a bank or other executivepositions with related responsibilities.
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Juridical person
i. has a min. AGI of at least P100M for at least 2yrs. prior to regis. Or
ii.a total portfolio investment in securitiesregistered with the Com. of at least P60M or
iii.a net worth of not less than P100M.
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REMEDIES
Request for Opinion P5000.00 fee
Request for Exemptive Relief P20,000.00 fee
Request for confirmation under SRC Rule 9.1 P20,000.00
Request for confidentiality
Company-initiated offer of monetary penalty in lieu ofsuspension
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Some manipulative devices1. Wash sale
when stocks are traded without a genuine
change in actual beneficial ownershipmaking it appear that the stock is activelytraded
2. Improper matched order
when both the buy and sell orders are
entered at the same time with the sameprice and quantity by different butcolluding parties, giving the appearance ofactive trading of the shares
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Some manipulative devices3. Marking the close
placing an order near the close of the trading
day in an effort to close the price higher orlower than the previous price
4. Hyping and dumping the stock
buying activity at increasingly higher (or lower)prices and then selling securities in the market at
the higher (or lower) prices after announcing aglossy picture of a particular issue as a goodinvestment contrived to sustain public interest inthe shares and thus lure investors to trade
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Some manipulative devices5. Squeezing the float
taking advantage of a shortage of securities inthe market by controlling the demand side andexploiting market congestion during suchshortages in a way as to create artificial prices
6. Stop loss order
placed to protect a recognized gain in theprice of securities against potential loss. It
reflects the lowest price that a seller is willing tosell at even though this is lower than the currentmarket price. It is a hedge against marketdecline.
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Some manipulative devices7. Painting the tape
a series of transactions in securities that
are reported publicly to give theimpression of activity or pricemovement in a security
8. Circulating unverified rumor-based
information
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Some manipulative devices9. Short selling
selling stocks which he does not own, in
anticipation that the price will decline andthat he will be able to cover the sale by
purchasing them back at a later date at a
lower price
10. Repurchase(buy back) of outstandingstock by issuers
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Fraudulent transactions1. Churning
situation where a broker-dealer (B/D) is the
sole or dominant market-maker in aparticular security and creates a market in
that security by repeated purchases from
and resells to, its individual retail customers
at steady increasing prices
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Fraudulent transactions2. Scalping
where a B/D or investment banker
recommends the purchase of securities w/odisclosing its practice of purchasing of such
securities before making the
recommendation and then selling them at
a profit when the price rises after the
recommendation is disseminated
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Fraudulent transactions3. Single day trading practice
buying and selling shares in a single trading
session, where the investors settle theiraccounts at the end of the day. Day
traders usually follow a trend of buying
activity on a particular stock and then sell
the same issue on the same day after a
profit has been realized even w/o any cashoutlay.
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Fraudulent transactions4. Front-running
where brokers, also acting as dealers,
prioritize their own dealer accounts byexecuting their own orders on a particular
issue ahead of their clients.
5. use of information obtained in fiduciary
capacity for the purpose of soliciting ormaking purchases, sales or exchanges ofsecurities
6. others under SRC Rule 26.3-2
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Insider Trading
Trading of securities on amaterial non-public information
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Insider Issuer
A director or officer (or person performing
similar functions) of, or person controllingthe issuer
Person whose relationship or formerrelationship to the issuer gives or gave himaccess to material information about the
issuer or the security that is not generallyavailable to the public
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Insider Person whose relationship or former
relationship to the issuer gives or gave himaccess to material information about the
issuer or the security that is not generallyavailable to the public
A government employee or director or officerof an exchange, clearing agency and/or self-regulatory org. (SRO) who has access to
material info about an issuer or a security thatis not generally available to the public
A person who learns each info by acommunication from any of the foregoinginsiders
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Material non-public info Has not been generally disclosed to the
public and would likely affect the marketprice of the security being disseminatedto the public and the lapse of areasonable time for the market to absorbthe info
Would be considered by a reasonable
person important under thecircumstances in determining his courseof action whether to buy, sell or hold asecurity
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Tipee
A person who receives inside infofrom persons such as an officer ordirector. Its unlawful for one to tip
material non-public info to anotherthat trades thereon. However, thereis no violation if it is a legitimatedisclosure to another as part of
performing ones duties to the issuerwith no expectation that the personlearns of the info is likely to trade.
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Short swing
Profits earned within 6 mons.
of a trade including profitsmade from a sale of securityfollowed by their purchase
within 6 mos.
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Rule 23.2Any profit realized by a beneficial owner,
director of officer from any purchase and
sale or any sale and purchase of anyequity security of such issuer within anyperiod of less than 6 mos. shall inure toand be recoverable by the issuer,irrespective of any intention of holding the
security purchased or of not repurchasingthe security sold for a period exceeding 6mos.
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Who may institute suit? By the issuer or
By the owner of any security in the name
and in behalf of the issuer if the issuer shallfail diligently to prosecute the samethereafter
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When?
Within 2 years after the datesuch profit was realized
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Protection to investors Mandatory Tender Offer Rule
TO - is a publicly-announced intention by a purchaser toacquire a certain block of equities of a company thru open
market purchases or private negotiations. Sec. 19, SRC
MTOs - any person or group of persons acting in concertwho intends to acquire 35% or more equity shares in apublic company in one or more transactions within a 12-
mo period or less than 35% which would result in ownershipof over 51% of the total outstanding equity securities of apublic company (at a price supported by a fairness opinionprovided by an independent financial advisor r equivalentthird party.
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tender for the percent sought to
all holders of such class
if TO is oversubscribed, the
aggregate amount of securities to
be acquired at the close of suchTO shall be proportionately
distributed across both selling
shareholder with whom the
acquirer may have been in privatenegotiations and minority
shareholders.
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Exempt from MTO
Requirement
any purchase of shares from the unissuedcapital stock provided that the
acquisition will not result to a 50% or moreownership of shares by the purchaser
any purchase of shares from an increasein authorized capital stock
purchase in connection with privatizationundertaken by the govt. of the Phil.
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Exempt from MTO
Requirement
purchases in connection with corp. rehabunder court supervision
purchase thru an open market at theprevailing market price
merger or consolidation
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UCC - Listed
UCHC 60.51%Non-listed
CEMCO17.03%
BCI21.31%
ACC29.69%
CEMCO 9%
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CEMCO acquired BCI and
ACCs shares (51%) in UCHCCEMCOs total Beneficial Ownership in UCC
Particulars Percentage
Existing ownership in UCHC 9%
Acquisition from BCI and ACC 51%
% of UCHCs ownership in UCC 60%
Indirect ownership of CEMCO inUCC
36%
Direct of CEMCO in UCC 17%Total ownership 53%
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Rules on proxy solicitation Proxy
must be in writing
signed by the stockholder or his authorizedrep. and
filed with the corp. sec. before the meeting
valid only for the meeting for which it is
intended valid for not more than 5 yrs.
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Rules on proxy solicitation Proxy solicitation
any request for proxy or authorization
any request to execute or not toexecute or to revoke a proxy orauthorization or
the furnishing of a form of proxy or other
communication to security holdersunder reasonably calculated to result inthe procurement, withholding orrevocation of a proxy
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Does not apply tothe performance by any person of
ministerial acts on behalf of a
person soliciting proxy or
any solicitation made otherwise
than on behalf of the registrant
where the total number of personssolicited is not more than 19.
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Obligation of a Registrant Proposing to
Hold Stockholders Meeting
Transmit to stockholders at least 15 daysbefore the meeting
An Information StatementA proxy form (in case of proxy
solicitation)
Management report
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Civil LiabilitiesA. On account of false registration statement
Person liable
Issuer and every signatoryA director of or person performing similar
functions, or a partner in, the issuer at the time ofthe filing of the RS or any part, supplement oramendment thereof
Every person who is named in the RS as being or
about to become a director of, or a personperforming similar functions or a partner in, theissuer and whose written consent thereto is filedwith the RS
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every auditor or auditing firm named as havingcertified any financial statements used with the RS or
prospectus
every person, who with his written consent, which shallbe filed with the RS, has been named as havingprepared or certified any part of the RS, or as having
prepared or certified any report or valuation which isused in connection with the RS, with respect to thestatement or valuation, which purports to have beenprepared or certified by him
every selling shareholder who contributed to and
certified as to the accuracy of a portion of the RS, withrespect to that portion of the RS which purports tohave been prepared or certified by him
Every underwriter with respect to such security
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Civil LiabilitiesB. Arising in connection with prospectus, communications
and reports
Who is liable?
Any person who offers to sell or sells a security by means ofa prospectus or other written or oral communicationwhich includes
An untrue statement of a material fact or
Omits to state a material fact necessary in order to
make the statements not misleading (the purchaser notknowing of such untruth or omission) and who shall fail inthe burden of proof that he did not know, and in theexercise of reasonable care could not have known, ofsuch untruth or omission
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To whom is he liable?
To the person purchasing such security fromhim.
How much can he recover?
The consideration paid for such security withinterest thereon less the amount of anyincome received thereon, upon the tenderof such security or for damages if he nolonger owns the security.
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Civil LiabilitiesC. For fraud in connection with securities
transactions
Any person who engages in any act ortransaction in violation of Secs. 19,2, 20 or 26 orany rule or regulation thereunder shall be liableto any person who purchases or sells anysecurity, grants or refuses to grant any proxy,
consent or authorization, or accepts or declinesan invitation for tender of a security, fordamages sustained by such other person as aresult of such act or transaction.
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Civil LiabilitiesD. For manipulation of security prices
For violation of Sec. 24, he shall be liable toany person who shall purchase or sell anysecurity at a price which was affected bysuch act or transaction, and the person soinjured may sue to recover damages
sustained as a result of such act ortransaction.
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Civil LiabilitiesE. On account of insider trading For violation of Subsection 27.1 and Subsection
27.4(a)(i) or any rule thereunder shall be liable in a
suit brought by any investor.
An insider who violates Subsec. 27.3 or any person
in case of a tender offer who violates Subsec.
27.4(a) or any rule thereunder shall be jointly liable
under Subsec. 61.1 with, and to the same extent as,
the insider, or person in the case of a tender offer,to whom the communication was directed and
who is liable under Subsec. 61.1 by reason of his
purchase or sale of a security.
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Civil LiabilitiesF. Amount of damages to be awarded
All suits to recover damages pursuant to
Secs. 56, 57, 58, 59, 60 and 61 shall bebrought before the RTC which canaward not exceeding triple the amountof the transaction plus actual damages.
Exemplary damages may also beawarded in cases of bad faith,malevolence or wantonness in violationof the Code and its IRR.
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Civil Liabilities It can also award attorneys fees
not exceeding 30% of the award.
All persons specified in said sectionsshall be jointly and severally liable
for the payment of damages.
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Civil LiabilitiesAll persons including the issuer shall
contribute equally to the total liability
adjudged therein.No principal shareholder, director or
officer of the issuer or person performingsimilar positions shall recover theircontribution to the liability from the issuer.However, the right of the issuer to recoverfrom the guilty party the amount it hascontributed shall not be prejudiced.