MANILA, Philippines (UPDATED) – “Painting the tape” and “hype and dump.”
These are the methods at least 13 individuals employed to manipulate the share price of agribusiness firm Calata Corp. in the Philippine Stock Exchange, the Securities and Exchange Commission (SEC) said in complaint filed before the Department of Justice on Wednesday, November 28.
In its 78-page complaint, the SEC alleged that the individuals, who include former owners of Calata before its maiden market offer and the firm’s financial advisor, conspired with one another to artificially raise the price of Calata shares by as much as 226%.
Charged for market manipulation under Section 24(b)(i) and (iii) of Republic Act 8799, otherwise known as the Securities Regulation Code, were:
- Michael Ilustre Angeles,
- Carmeo Dela Cruz Bunag,
- Arnold Ryan Dellosa,
- Richie Ramille Isip,
- Arnold Daquiz Martin,
- Gary Lincoln Taboso,
- Dennis Philippe Vistan,
- Zandro Jose Zulueta,
- Glaizel Eco,
- Juvy Ocampo,
- King Bryan Sulit,
- Alvin Morfe,
- Sheryl Sia.
Zulueta is the CEO of Absolute Traders & Consulting Services Inc., the financial advisor of Calata when it conducted an initial public offering (IPO) in May.
He was also shareholder of Calata prior to the IPO, along with Isip, Taboso and Vistan.
The SEC said the respondents “traded Calata shares from May 23 to June 8, 2012 through multiple brokers to intentionally and unlawfully raise the price of the said shares through illegal schemes such as as ‘painting the tape,’ ‘hype and dump’ and other methods for their own profit.”
Painting the tape happens when one engages in a series of transactions that are reported publicly to give the impression of activity in a security.
Hype and dump is buying at increasingly higher prices than current levels, and then selling at even higher prices.
The schemes allowed the respondents to sell 86.99 million Calata shares during the period, earning P216 million, which provided them more funds to continue manipulating the price of Calata even beyond the period,” said the SEC.
The SEC noted the list of respondents may still grow.
“Various John and Jane Does who may have provided the funds for the trades of the respondents and/or aided or abetted in the commission of the crime herein charged… have yet to be identified.”
Over 200% share price hike
Calata held an IPO on May 23 at an offer price of P7.50 per share.
Since its IPO, Calata shares rose by a cumulative 226% to a peak of P23.95 per share, its market closing price on June 4.
The SEC said the increase was peculiar since “there were no significant events or disclosures made which could have accounted for the sharp increase in the price and volume traded for Calata shares.”
The SEC, through its Investor Protection and Surveillance Department, wrote the Capital Markets Integrity Corp., a self-regulatory organization tasked to regulate and monitor trading activities at the PSE, about the strange movement in Calata’s share price.
The SEC said it found conspiracy among the respondents because their trades “were clearly coordinated and intended to have a significant impact.”
Zulueta and the other pre-IPO shareholders accounted for 32.95% of the volume of Calata shares bought, and 38.47% of those sold.
According to the SEC, they “financed the participation” of the other respondents in the price manipulation “through their independent holdings or [rolled] over proceeds of their scheme.”
Eco, Ocampo, Morfe, Sia and Sulit were also connected with Calata.
The rest — Angeles, Bunag, Dellosa and Martin — either resided in “depressed areas” or owned small assets, therefore, “would not have [had] the financial means to commit market manipulation by themselves.”
If found guilty, the respondents may be fined between P50,000 and P5 million, and imprisoned for 7 to 21 years, depending on the decision of the courts. – Rappler.com