What do the following locations have in common: a hospital waiting room, a fast-food restaurant and a bus terminal? You will probably see a sign that reads: “Do not leave your valuables unattended”.
A person with even the minimum amount of common sense understands that you have to take care of your own possessions. The sign is placed there, not to inform people of the realities of life, but to simply remind them if they get distracted. Also, you may see, “This establishment is not responsible for any loss or theft of personal property.”
Perhaps a copy of those two signs should be put at the top of every stockbrokerage account form in big letters.
An important legal concept is “in loco parentis,” which is Latin for “in the place of a parent.” It helps define the legal responsibility of a person or organization to take on some of the responsibilities and functions of a parent. This idea has, most often in the past, been applied to a school setting, where teachers and administrators are required and expected to protect the students in a manner similar to how parents would protect their children.
The problem is that many people still expect to be treated and protected as if they were children and kept out of trouble.
The delisting of the shares of Calata Corp. by the Philippine Stock Exchange has created the same kind of complaining. Sure, many investors have been left holding the bag, and it is certainly reasonable that they would be angry.
Nonetheless, if a baby is born under a full moon with wolves howling in the night, fiery red eyes and a skull-and-crossbones birthmark on its forehead, this may not be the person you want holding your immortal soul in the future.
When the stock of a listed company appears to have been manipulated from the first day of trading, and 13 individuals are charged with that manipulation, it might be wise to find another issue to buy. And do not expect either the Philippine Stock Exchange (PSE) or the Securities and Exchange Commission (SEC) to act as your mommy to protect you. That is your job. Philippine courts have clearly ruled in cases of investors being taken for a bad trip that the SEC does not have “in loco parentis” responsibilities.
While both the PSE and the SEC have rules and penalties for breaking those rules, the same can be said for snatchers and bank robbers. But if you rely on those laws to protect you, you are just being foolish.
Trading in Calata shares was suspended for—among other violations—failure to file the required disclosures and documents to the PSE in a timely manner. You can be late paying your association dues or with your spouse’s birthday present. You do not fail to file on time if you are a listed company. Earlier this year, I cautioned that a listed company was late in filing its financial statement. They submitted their documents the next day, one day late. No harm; no foul.
But the reality is that a company that does not file on time is either hiding something or is incompetent and, either way, is not a company you want to own. “Do not leave your valuables unattended” and “This establishment is not responsible for any loss or theft of personal property.” That is the way it is and, if you are old enough to invest, you should be mature enough to know that.
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E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.
1 comment
Cool