Abra Mining officials, agents fined P560M for bogus shares

The Securities and Exchange Commission (SEC) has slapped fines totaling P560 million on Beloy family-led Abra Mining & Industrial Corp. for the illegal sale and trade of spurious shares spanning five years.

The issue stemmed from irregularities in the company’s shares lodged with the Philippine Depository and Trust Corp. (PDTC) that the SEC said way exceeded the number of shares formally listed on the local bourse. The Philippine Stock Exchange (PSE) requires that all fully paid issued and outstanding shares must be applied for listing.

In three separate decisions dated April 8 and released to the media on Sunday, the SEC Markets and Securities Regulation Department (MSRD) found Abra Mining guilty of violating Section 26 of the Securities Regulation Code (SRC) and Section 61 of the Revised Corporation Code (RCC).

Under the SRC, it is illegal for “any person, directly or indirectly, to employ any device, scheme or artifice to defraud or engage in any act, transaction, practice or course of business which would operate as a fraud or deceit upon any person.” Section 61 of the RCC, meanwhile, provides that stocks may not be issued for less than their issued price.

According to the SEC, shares of Abra Mining, whose trading has been suspended since March 4, 2021, due to the controversy, lodged with the PDTC totaled 258.957 billion, but only 72.746 billion were listed.

Found liable were Abra Mining president James Beloy; corporate secretary Amelia Beloy; directors Conde Claro Venus, Carmelo Rafael Tansengco, Premy Beloy and Joel Beloy; and former director Belinda Gaskell.

“[The officers and directors] necessarily had, or should have had, knowledge of the illegal circumstances regarding the issuances of the [illegal shares] during the years that they served as directors of [Abra Mining],” the MSRD said in its decision.

The SEC revoked Abra Mining’s registration statement and certificate of permit to offer and sell securities. As a result, Abra Mining was fined P47.4 million.

Its officers and directors, who were also required to pay P2.58 million in fines, were disqualified from selling securities and barred from associating with and prohibited from serving as an employee, officer or director of a registered financial intermediary under the SEC’s supervision for five years.

The MSRD also held stockholders Ferdinand Collado, Leila Collado, Susan May Gacelo, Jubileum Air and Sea Logistics Inc., and Andrei Vincent Freight Services Corp. liable for violating the SRC. Penalties ranged from P400,000 to P33.5 million each.

They were found to have never paid the full price of the shares they supposedly acquired via private placement through then Abra Mining president Jeremias Beloy, according to the SEC.

The MSRD said in its decision that a total of 474 stock certificates were issued to them from 2015 to 2019 despite having no concrete evidence that they made any payment for the shares.

“Even further, as [the stockholders] circulated the illegally issued shares on the market, this operates as fraud upon the investing public,” it added.

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They were also disqualified as officers or board members of an issuer of registered securities.

Stock transfer agent Asian Transfer & Registry and its officers were also found liable for lodging the illegal shares with PDTC, which had paved the way for the trading of the shares in the stock market. The company was fined at least P47.4 million.

The MSRD noted that despite knowing about the defects in the issuance of the shares, Asian Transfer & Registry “fraudulently warranted that such shares were not defective and eligible for lodgment.”

A stock transfer agent is in charge of verifying whether shares are not fictitious and are listed on the PSE before these are lodged at the PDTC.

Its registration and license as a stock transfer agent was also revoked. INQ