LAWMAKERS on Wednesday urged the National Bureau of Investigation (NBI), the Office of the Ombudsman and the Capital Markets Integrity Corp. (CMIC) to look into the alleged self-dealing by four officials of the Social Security System (SSS) in the stock market.
Deputy Minority Leader Luis Campos Jr. of Makati City said in a statement that these officials of the state-owned pension fund may have violated the Code of Conduct and Ethical Standards for Public Officials and Employees and the Ant-Graft and Corrupt Practices Act.
Under the law, Campos said public officials and employees are forbidden from having a financial or material interest in any transaction requiring the approval of their office, and from misusing for their private interests’ classified information known to them by reason of their office.
According to the lawmaker, the NBI should perform a “forensic accounting” on the private stock trades of the executives, who are now facing an administrative complaint for “serious dishonesty and grave misconduct” before the Social Security Commission, the pension fund’s governing board.
Earlier, SSS Commissioner Jose Gabriel La Viña has filed a complaint against SSS Executive Vice President for Investments Rizaldy Capulong and three other officers whom he accused of serious dishonesty and grave misconduct.
Capulong was charged for allegedly illegally profiting from his position by trading his own stocks using the very same stockbrokers who manage the portfolio of the state-administered pension fund.
Apart from Capulong, included in his complaint filed with the Social Security Commission are Equities Investment Division Chief Reginald Candelaria, Equities Product Development Head Ernesto Francisco Jr. and Chief Actuary George Ongkeko Jr.
The complaint alleged that Candelaria and Francisco in particular used information they obtained from an accredited SSS broker to “profit” from the initial public offerings (IPOs) of five companies, instead of recommending them to the Social Security Commission.
Companies use IPOs to list at the Philippine Stock Exchange (PSE) for the first time so that their shares may be freely bought and sold in the open market.
“There may have been several ways by which the executives conducted personal trades using information that was available only to them as managers of the SSS’s stock-market investments,” Campos said.
“They may have been front-running and tailgating. It is possible they bought shares for their personal accounts at a lower price before they sent out large buy orders for the SSS’s portfolio,” Campos added. “And then they may have sold their shares once prices were driven up by the buy orders for the pension fund’s account.”
Meanwhile, Campos said CMIC should also get involved because of allegations that the executives conducted personal trades using the same brokers accredited to buy and sell shares for the SSS’s account, and that the brokers may have known that the executives directing the pension fund’s trades were also trading for themselves.
Campos also urged the CMIC to find out whether the accredited brokers gave the SSS executives margin or loan accounts that may have enabled them to conduct large trades and rake in huge profits for themselves without putting up a lot of their own cash.
The CMIC is the PSE’s primary and independent regulator of stockbrokers, who are duty-bound to live up to the highest ethical standards.
Rep. Ben D. Evardone of the Lone District of Eastern Samar, chairman of the House Committee on Bank and Financial Intermediaries, has said he will file a resolution on November 2 to probe the irregularities in the state-owned pension-fund agency.
For his part, Party-list Rep. Ariel Casilao of Anakpawis said the SSS leadership should look into other investment dealings of the pension-fund manager, as he called for the resignation of involved officials.
“It is disgusting that these corrupt SSS officials are raking personal, huge payout using SSS remittances as investments,” Casilao said. “This goes to show that it is wrong to blame pension hike over the slow depletion of the fund but, in fact, it is the corrupt practice, fund mismanagement and the improper collection of remittances that are behind the dwindling SSS fund shortage.”
He also asked the SSS management to look into other investments, as this discovered that shady dealing is not an isolated case.
“We also call the SSS board to discharge from [their respective posts] those who are involved on the ‘stock grabbing,’” the party-list lawmaker also said. “Anakpawis also urged SSS members and pensioners to demand the immediate resignation of these crooked SSS officials.”
1 comment
This is not insider trading if the information came from the brokers ASSUMING, they in turn arrived at this information from their own analysis. But when these 4 SSS officials traded their personal portfolios to gain personal profit before SSS, this is serious crime.
If there was inside information received by the brokers from the traded companies, then the brokers and the informant should also be punished along with these 4 officials.
The heaviest penalty, however, should be imposed on these 4 SSS officers. The investigation should go way back in the System because it is acts like these that result in mediocre earnings for the SSS.