THE Securities and Exchange Commission (SEC) has stopped the Philippine Stock Exchange (PSE) from suspending the trading on Benguet Corp. It also recalled the fines the exchange imposed against the mining company. By doing so, it served notice to the PSE that there is a limit to its status as a self-regulatory organization. In issuing its order against the PSE on the same day, October 26, when the trading suspension on Benguet should have taken effect, the SEC also proved its efficiency in acting speedily on complaints that reached its officials. Nobody knows for sure if the five-man commission acts quickly on all cases, complaints or petitions that still fall under its jurisdiction and not only on those filed by the market’s blue chips such as Benguet or Philippine Long Distance Telephone Co. or San Miguel Corp. but also those that came from individual investors. Janzen Marquez, who identified himself as an independent stockbroker, may want to try the SEC officials if they would not be selective in their dealing with the public by filing with the commission his complaints against Benguet. Your filings/complaints and the commission’s actions on them will surely be closely watched by the public.

With SEC’s intervention in the guise of asserting its power over listed companies, how could the PSE continue to provide protection for investors which the SEC could not give? The answers came from Lim himself. In a “Notice to the Public,” he explained the incidents that led to the decision of the PSE board to punish Benguet which, he said, has “repeatedly violated the unstructured disclosure requirements of the Revised Disclosure Rules of the Exchange.” He also informed investors that “the imposition of penalties was done only after careful and deliberate evaluation of the views of Benguet on the disclosure matters at hand over an extended period of time” and the exchange board “also took into account the corporation’s record of nondisclosure violations in the past.”

Lim, however, did not limit himself to the retelling of the circumstances surrounding Benguet’s failure to comply with the rules. In closing his “Notice to the Public,” which is posted on the PSE website, he issued this warning: “In the light of the foregoing, the Exchange feels duty bound to advise the general public to exercise caution and due diligence before buying or selling any BC shares.” What can the SEC officials say on Lim’s caveat emptor? Did the PSE chief violate the commission’s order against him?

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Petron Corp., now a private corporation, is preparing to borrow by issuing preferred shares. In a filing posted on the PSE website, the Philippines’s biggest oil retailer, which is now controlled by San Miguel Corp., it will first convert 624,895,503 common shares into preferred shares, which it will then issue. The filing did not say if it will sell the preferred shares to the public or only to selected investors.

The soon-to-become preferred shares through an amendment to Petron’s articles of incorporation, which is one of the documents that make up a stock corporation’s corporate records filed with the SEC, represent 6.249 percent of Petron’s authorized capital stock consisting of 10 billion common shares with P1 par value. (Stock corporation is used here to differentiate it from partnerships.) Of the 10 billion common shares, 9,375,104,497 shares are issued and outstanding.

As records show, Petron still has 10 billion common shares in its authorized capital stock. In the posting informing its stockholders of the conversion into preferred shares of its unissued common shares, Petron did not say disclose other details in the issuance of preferred shares. Neither did it update the public on its plan to increase its authorized capital to P25 billion from P10 billion —the peso amount is based on par value of P1. Petron said its board approved the huge capital increase, along with the inclusion in its primary purpose of “generation and sale of electric power” on February 27.

Hopefully, this is only a temporary omission on the part of Petron because with its 10 billion capital stock fully utilized with the conversion of the unissued common shares into preferred shares, its stockholders cannot expect to receive dividend in stocks but only in cash, which anyway will also be welcome by the remaining few public investors.  Petron reported P15.492 billion and P10.077 billion appropriated and unappropriated  retained earnings as of June 30.