Pauline A.

Maramag
BSAT 4-1

September 3, 2015
Finance 105
INSIDER TRADING IN THE PHILIPPINES

Meralco faces probe for insider trading

By Zinnia B. Dela Peña | Updated November 21, 2002 - 12:00am
As if its present travails were not enough, Manila Electric Co. (Meralco) now faces an
investigation by securities regulators for possible insider trading following reports that some
people may have heavily sold shares of the company prior to the release of the Supreme Court
ruling requiring Meralco to refund P28- billion worth of overbillings to consumers.
Securities and Exchange Commission (SEC) Chairperson Lilia R. Bautista said the Philippine
Stock Exchange (PSE) is now investigating the case to determine whether rules on insider
trading were violated.
"I think that the PSE is aware and is already looking into it," Bautista said, adding that the SEC
will await the results of the PSE investigation before conducting its own.
The investigation is intended to determine whether officials or directors of Meralco sold their
shares ahead of the issuance of the court decision last Nov. 15. The Supreme Court found
Meralco guilty of overcharging its clients since 1994.
Meralco officials, however, denied any wrongdoing and said the firms stock transfer agent
would be the best person to ask.
The Securities Regulation Code prohibits any individual, regardless of position within the
company, from buying or selling the companys stock while in possession of material information
which is not yet publicly disseminated.
The prohibition even applies to persons not employed by the company if they have access by
any means (including but not limited to tips from others) to material non-public information about
the firm.
Last Friday, Meralco A and B shares declined as market players anticipated the decision of the
High Court on the overbilling charge against the power distributor. Meralco A shed P.50 while
the B shares lost P2.25.
On Monday (Nov. 15), the immediate trading day after the Supreme Court handed down the
ruling, Meralco fell nearly 40 percent, dragging down the composite index. A shares slid to
P5.20 while B shares dropped to P6.60 per share. The selloff, however, hardly surprised market
analysts.
As of those close of trading hours yesterday, trading of Meralco shares improved with A shares
rising to P9.80 from P8.70 Tuesday while B shares inched up to P11.50 from P10.25.
Violations of the insider trading nature are slapped either criminal and/or administrative
penalties that include monetary fines, suspension or imprisonment.
Under the SRC, violations of any provisions or any rules and regulations of the SEC are fined

between P50,000 to P5 million or face imprisonment of between seven to 21 years or both.

The government owns 24 percent of Meralco while the Lopez family controls 16 percent.
Standard & Poors cut its rating on the company by two notches to B-plus from BB on Friday
after court ruling.
Meralco president and chief operating officer Jesus P. Francisco said the company has initiated
talks with local lenders in light of the High Courts decision. He said that Meralco still has
adequate assets to assure its creditors that it will not file for bankruptcy.
Meanwhile, PSE president Ernest Leung said the PSEs Compliance and Surveillance Group
(CSG) has kept track of Meralcos transactions during the period and would correlate the
sequence of negative events for the company on the movements of it stocks.
"We have marked those events that are already in the public domain and look for patterns,
particularly the unusual kind. In these instances, we work on the hypothesis that groups may
have prior knowledge of vital information not yet disclosed to the public," Leung said.
SOURCE: http://www.philstar.com/business/184822/meralco-faces-probe-insider-trading
FILED UNDER: Business News

Pauline A. Maramag
BSAT 4-1

September 3, 2015
Finance 105
INSIDER TRADING IN THE PHILIPPINES

Jury says Cuban did not commit insider trading

by Manila Bulletin
October 17, 2013
DALLAS (AP) Mark Cuban won a years-long fight with the U.S. government Wednesday as
jurors decided that the billionaire basketball team owner did not commit insider-trading when he
sold his stake in an Internet company in 2004.
The jury in federal district court in Dallas said that the Securities and Exchange Commission
failed to prove the key elements of its case, including the claim that Cuban agreed to keep
certain information confidential and not trade on it.
The nine-member jury deliberated only a few hours before reaching the verdict that ended a
three-week trial and an SEC lawsuit filed in 2008.
During an impromptu news conference outside the courthouse, Cuban angrily denounced the
SEC and its lead trial attorney, Jan Folena, saying that they lied about the evidence and
targeted him because of his fame. He said that defendants of lesser wealth could have been
bullied.
Hopefully people will start paying attention to how the SEC does business, Cuban said. Im
the luckiest guy in the world. Im glad this happened to me. Im glad Im able to be the person
who can afford to stand up to them.
Folena, who left the courthouse just minutes before Cuban, said, We believe we did the best
we could in this case, and things turn out the way they turn out.
The SEC accused Cuban of using inside information to sell $7.9 million of stock in Mamma.com
Inc. after he learned of a stock offering that would depress the price of shares in the search
engine company. The agency wanted Cuban to repay $750,000 in losses that he avoided, plus
pay a penalty. It was a civil lawsuit, so the 55-year-old Dallas Mavericks owner and regular on
the ABC reality show Shark Tank didnt face criminal charges.
The companys CEO testified by video that Cuban, the largest shareholder, agreed during an
eight-minute phone call that he wouldnt disclose what the CEO told him about the stock offering
or sell his shares on the news. He sold them a few hours later, however, before the company
announced the stock offering to the public. Cuban disputed the CEOs claims.
This was a credibility contest and Cuban won, said John Coffee, a law professor at Columbia
University. Cubans lawyers attacked the credibility of the CEO, Guy Faure, and Coffee said the

SEC failed to produce evidence to support Faures account of the phone call, which was not
recorded. The verdict, he said, tells the SEC to stay away from he-said, she-said cases.
Jeffrey Ansley, a former SEC enforcement lawyer now in private practice in Dallas, said the
jurys fast verdict was a condemnation of the SECs case.
The SEC lost every place where they could have lost, and because of that, this has to impact
how the SEC staff decides which cases to bring, Ansley said. He said the agency may become
gun-shy about challenging people with the means to mount an aggressive defense, as Cuban
did.
SEC spokesman John Nester said the verdict will not deter us from bringing and trying cases
where we believe defendants have violated the federal securities laws.
The SEC sued Cuban in 2008. U.S. District Judge Sidney Fitzwater dismissed the lawsuit in
2009, but his ruling was overturned by an appeals court, which sent the case back to Fitzwater
for the trial that ended Wednesday.
Sports Illustrated lists Cuban among the 50 most powerful people in sports. He built the hapless
Mavericks into an NBA champion, along the way building a reputation for berating referees. The
NBA has fined him at least $1.5 million for his comments.
Forbes magazine estimates Cubans wealth at $2.5 billion. If the jury had ruled for the SEC,
Cuban could have faced roughly $2 million to $3 million in fines and penalties. On Wednesday,
Cuban said he spent much more than that on the lawyers who delivered him a victory in the
courtroom.
SOURCE: http://www.mb.com.ph/jury-says-cuban-did-not-commit-insider-trading/
FILED UNDER: World News