SEC En Banc Case No. 09-11-244 IN THE MATTER OF ACESITE (PHILS.) HOTEL CORP., ABACUS SECURITIES CORPORATION and SHIELA MARIE C. AGUILAR (AP), AB CAPITAL SECURITIES, INC. and ERICSON C. WEE (AP), B.H. CHUA SECURITIES CORP. and VIOLETA T. CASTILLO (AP), TOWER SECURITIES, INC. and ADORA C. CABILES (AP), VENTURE SECURITIES, INC. and ADORA M. AGUILAR (AP), Appellants, -versus- ENFORCEMENT AND PROSECUTI

curities and Exchange Commission Republic of the Philippines Department of Finance

IN THE MATTER OF

ACESITE (PHILS.) HOTEL CORP.,

SECURITIES, INC. and ADORA M. SECURITIES, INC. and ADORA C. SECURITIES CORP. and VIOLETA AGUILAR (AP) MARIE C. AGUILAR ERICSON C. WEE (AP), B.H. CHUA CABILES CAPITAL SECURITIES, T. ABACUS CORPORATION CASTILLO (AP), (AP), and SECURITIES VENTURE Appellants, (AP), AB INC. and TOWER SHIELA Implementing Regulations For: Violation of Section 24.1 of the SRC in relation to SEC En Banc Case No. 09- Rule 24.1 (b)-1 of its 11-244 (EPD Case no. 11-2929) Rules and

-versus-

PROSECUTION DEPARTMENT, ENFORCEMENT Appellee. AND

X

DECISION

"EIPD" dated September 15, 2011 finding appellants liable for violating Section 24.1 of the Securities Regulation Code ("Code") and ordering appellants to pay the monetary penalties under Section 54 of the same Code. now known as the "Enforcement and Investor Protection Department" or by Appellant Venture Securities, Inc. and Adora M. Aguilar dated September 30, 201 1 to assail the Order2 of the Enforcement and Prosecution Department, This resolves the Notice of Appeal and Memorandum of Appeal' filed

THE PARTIES

primarily engaged in the business of brokering, dealing and underwriting stocks, bonds, securities, mortgages and other choses in action. corporation organized and incorporated under domestic law, which is - Appellant Venture Securities, Inc. ("Venture") is a duly licensed

2 Id. pp. 74-118. Records, pp. 45-62.

In the Matter of: Acesite (Phils.) Hotel Corp. SEC En Banc Case No. 09-11-244 Page 2 of 10

instant case. defendants out of the ten (10) that appealed the Order of the EIPD in this ("Ap") of Venture. Defendants Venture and Aguilar are the only remaining Appellant Adora M. Aguilar ("Aguilar) is the Associated Person

of the Company Registration and Monitoring Department ("CRMD"). Exchange Commission ("Commission") tasked to ensure compliance by all action against them for infractions of the laws, rules and regulations among others, the selling, offering or transacting unregistered securities by entities without a secondary license, as well as to initiate petitions for revocation of corporate registration except those under the original authority Finally, the EIPD is tasked to investigate, motu proprio or upon a verified complaint or referral, violations of laws, rules and regulations implemented by the Commission, as well as to initiate the issuance of a Cease and Desist Orders ("CDO) by the latter. market participants, issuers and individuals, and take appropriate enforcement implemented by the Commission. The same is vested with the primary authority to conduct investigations and administrative actions involving, Appellee EIPD is one of the operating departments of the Securities and

STATEMENT OF THE CASE

In the assailed Order of the EIPD, the latter narrates that the Market

Regulation Department ("MSRD"), referred this case to the EIPD alleging that Beneficial Owners4 ("BOs") Forum Holdings Corporation, Pacific broker-dealers ("BDs") Westlink Global Equities, Inc, Abacus Securities, Images, Inc., Waterfront Philippines, Inc., Omar M. Guinomla, Richard D. Anderson, Peter S. Salud and Rogelio D. Garcia, through their respective Inc., AB Capital Securities, Inc., B.H. Chua Securities, Corp., Tower Securities and Venture Securities, Inc. are engaged in the manipulation of the Regulation Department of the SEC, now known as the Market and Securities

price of the Acesite (Phils.) Hotel Co rporation (formerly known as Delbros Hotel Corporation) (DHC through (a) Improperly Matched Orders

Period"). As a result, appellants were allegedly able to create a false and and (b) Painting the Tape Trades from June 19 to July 29, 2008 ("Covered

misleading appearance of active trading of the DHC shares.

3 Under Section 3.5 of the Securities Regulation Code is defined as: an employee therefor whom, directly arrangement, understanding, relationship or otherwise, has or shares voting power (which includes the power to vote or direct the voting of such security) and/or investment returns or power (which includes the power exercises control of supervisory authority, but does not include a salesman, or an agent or a person whose 4 Under Rule 3.1.2 of the 2004 Implementing Rules and Regulations of the SRC is defined as: "Beneficial to dispose of, or direct the disposition of such security)." functions are solely clerical or ministerial. owner or beneficial ownership means any person who, directly or indirectly, through any contract,

In the Matter of: Acesite (Phils.) Hotel Corp SEC En Banc Case No. 09-11-244 Page 3 of 10

charges be filed against them for committing market manipulation of the DHC shares during the covered period. Said BDs and BOs filed their respective herein ordering them to explain why no administrative sanction or criminal replies for the same. Thus, the EIPD sent show-cause letterss to the BDs and BOs involved

in relation to SRC Rule 24.1(b)-1 of its Amended Implementing Rules and the BDs and BOs, finding them liable for violation of Section 24.1 of the SRC Regulations. On September 15, 2011, the EIPD issued the assailed Orders against

Inc. complied with said Orders by paying the fine imposed upon them denied by the EIPD through an Order dated October 25, 2011. However, BDs Abacus Security Corp. and AB Capital Securities, Inc. filed their respective Letters of Reconsideration on October 7, 2011, which was All the BOs and BDs B.H. Chua Securities Corp. and Tower Securities.

respective BOs, except appellant Venture paid their respective penalties. During the pendency of this case, all the other appellants and their

November 3, 2011 to controvert the allegations in the same. by appellants on September 30, 2011 before the Commission En Banc. Subsequently, the EIPD filed its respective Reply-Memorandum' dated Hence, the instant Notice of Appeal and Memorandum of Appeal filed

ISSUES

the lack of knowledge or access to such information as would lead them to manipulate the prices of the DHC shares. suspect that the BOs involved herein were in collusion with each other to In their Memorandum of Appeal, appellants Venture and Aguilar raise

issues in this case: To simplify, this Commission considers that the following are the

I market price of DHC shares under Sec. 24 through: (a) Improper Whether or not the appellants are liable for manipulating the Covered Period; and Matched Orders; and (b) Painting the Tape Trades during the

5 Records, pp. 37-44. Records, pp. 67-71 7 Filed on November 14, 2011.

In the Matter of: Acesite (Phils.) Hotel Corp SEC En Banc Case No. 09-11-244 Page 4 of 10

H. Practices. defense for Broker-Dealers in charges for Manipulative Whether or not lack of knowledge or access to information is a

DISCUSSION

Implementing Rules and Regulations through the above-stated methods done in the following manner: Section 24.1 of the SRC in relation to Rule 24.1 (b)-1 of the Amended appellants are found liable for committing manipulative practices under After a careful perusal of the facts and circumstances of this case.

committing Painting the Tape Trades Matched Orders. I Appellants are liable for through Improper

Regulation Code ("IRR"), the term Improper Matched Orders refers to Under the Implementing Rules and Regulations of the Securities

engaging in transactions where both the buy and sell orders are entered at the same time with the same price and quantity by different but colluding parties8 while Painting the Tape means engaging in a series of transactions in securities reported publicly to give the impression of activity or price movement in a security9. The ratio behind its prohibition is to prevent rigging of the market and to permit operation of the natural law of supply and demand.i.

Improper Matched Order is specific mode of manipulating the price of securities while Painting the Tape is a general one such that it may be Based on said definitions provided for under the Code and its IRR.

committed through a singular or combination of any of the manipulative practices enumerated under the law. In fact, the Code, its IRR and jurisprudence do not provide that said manipulative practices cannot co-exist or commingle with each other in one situation.

First, the BOs involved herein traded the DHC shares from June 19 to July 22, 2008, through their respective BDs including the appellants herein, in such a way that upon posting of a certain quantity of said shares for a certain price in the market for sale, the same will be matched and bought immediately in a matter of a few seconds or minutes by one or more of

% 2004 Implementing Rules and Regulations f the Securities Regulation Code, par. 4(ii), Rule 24.1(b)-1, 9 Id., par. 4(i. 10 U.S. vs Stein, 456 F.2d 844 (1972).

In the Matter of: Acesite (Phils.) Hotel Corp. SEC En Banc Case No. 09-11-244 Page 5 of 10

the appellants on behalf of their BOs for the same price, which when totaled matches the same quantity as sold in the market. T

This is apparent in appellant Venture's sell transactions from the June 25 to July 29, 2011 based on the Order Tickets, Deal Confirm Tickets, Buying and Selling Confirmation Invoices, Customer Account Statements and Customer which the EIPD summarized in the table below and which appellants failed to deny:

DHC Stock (Trade Date Trade NoQuantity Price Buy TP DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHG DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC DHC 6/25/08 6/25/08 6/25/08 6/25/08 6/25/08 6/27/08 6/27/08 7/10/08 7/10/08 7/10/08 7/10/08 7/10/08 7/16/08 7/16/08 7/16/08 7/16/08 7/21/08 7/21/08 7/10/08 7/10/08 7/16/08 7/16/08 7/16/08 7/21/08 7/23/08 7/24/08 7124/08 7/21/08 7/21/08 7/21/08 7123/08 7/23/08 7/24/08 7/24/08 7/24/08 7/24/08 7/24/08 7124/08 7/24/08 7/28/08 7/29/08 7/1/08 7/1/08 7/4/08 7/4/08 7/4/08 7/4/08 7/28/08 7/29/08 7/1/08 7/2/08 7/2/08 7/4/08 7/4/08 7/24/08 7/4/08 1180|304,000 10.00 2603 5118 1190 1227 3417 2617 2656 3175 3438 1682 2847 4573 2580 2582 2739 2750 2580 2777 3133 3151 3168 2516 038 3092 2778 3152 3152 5011 5012 5309 2544 5380 3942 2558 126,000 ..100,000 550,000 10.00 246,000 10.00 20,000 208,000 304,000 312,000 176,000 492,000 210,000 500,000 1030,000 37900 267,000 220,000 304,000 10.00 436,000 100,000 230,000 260,000 312,000 .67000 233,000 370,000 150,000 228000 180,000 40000 155,000 235,000. 183,000 623,000 223,000 50,000 155,000 200,000 200,000 42,000 43000 40,000 43,000 60,000 17,000 45000 50,000 41,000 25,000 4,000 10.00 700 16,000 7,000 13.00 4,000 10.00 7,000 7,000 13.00 10.00 .. . 0 9. 90 9.80AB CapitaPacific 9.80 9.80AB CapitalPacific 9.80 ..9.80 9.90 9.90 9.90 9. 90 9.80 9.90 9.90 9.90 9.90 9.90 9.80 9.80 9.80 9.80 9.80 9.80 9.80AB CapitalPacific 9.80 9.80|AB Capital Pacific 9.80AB CapitalPacific 9.80AB CapitalPacific .9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.80 9.8 AB CapitalRogelio Garcia Westlink Rogelio Garcia BH Chua`FHC BH ChuaFHC Westlink Rogelio Garcia Westlinki Rogelio Ga Westlink Rogelio Garcia BH ChuaFHC BH Chua Peter Salud Abacus|Omar Guinomla Abacus Richard Anderson BH Chua Abacus!Rogelio Garcia Abacus Omar Guinomla Abacus Rogelio Garcia Abacus Omar Guinomla ..Abacus FHC .Abacus FHC Abacus[FHC Abacus FHC Abacus Rogelio Garci Abacus Rogelio Garcia. Regina Rogelio Garcia Abacus:Omar Guinomla Abacus FHC Aba Abacus FHC UCPBOmar Guinomla cus Rogelio Garcia Buy Client terSalud Rogello Garcia Peter S. Salud Rogello Garcia Sell Client Peter Salud Peter Salud Peter Salud Peter Salud Peter Salud Peter Salud Om. Omar Guinomla Rogello Garcia Peter S. Salud Peter S. Salud Peter S. Salud PeterS.Salud Peter S..Salud [Peter Salud. Peter Salud] Peter Salu Rogelio Garcia Peter Salud [Peter Salud [Peter Salud [Peter Salud jRogelio Garcia [Rogelio Garcia Peter Salud Omai Rogello Garcia Rogello Garcia Omar Guinomla Peter Salud Peter Salud] Rogelio Garcia Peter Salud Peter Salud Peter Salu. [Peter Salud Peter Salud Omar GuinomlaVenture [Omar Guinomla Venture] [Peter Salud [Peter Salud Peter Salud Pete Peter Salud Omar Guinomla Rogello Garcla Peter Salud omarGu Peter Salud Rogello Garcla Rogello Garcla Peter o ello Garcia r Guin Saluc -Salu nl Venture Venture10:03:49 Venture10:04:48 Venture11:44:24 Venture Venture11:42:00 Venture Venture Venture Venture Venture Venture10:46:05 Venture Venture11:19:17 Venture Venture|10:52:28 Venture10:53:05 Venture11:00:14 [Venture] Venture11:24:46 Venture11:42:44 Sell TP Venture Venture Venture Venture Venture Venture Venture10:53:17 Venture11:00:21 Venture Venture Venture Venture! Venture [Venture10:49:25 Venture Venture11:07:48 [Venture Venture11:12:35 Venture Venture Ve Venture11:24:46 Venture] Venture11:09:28 Venture Venture Venture. Va Venture Venture Venture enture P tur ture ure 11:19:53 Buying |11:26:40 11:21:01 [11:42:44 10:50:36 Time 10:05:45 11:43:37 11:12:16 11:12:16 11:21:5 [11:06:52 11:43:23 11:06:52 11:14:21 11:39:58 10:42:30 Time Selling 11:20:57 10:03:11 10:52:28 10:03:11 10:03:11 10:05:45 10:05:45 11:19:44 11:19:44 11:43:34 10:41:54 10:41:54 11:09:59 11:09:59 11:19:14 11:19:14 11:26:35 10:52:28 10:52:28 11:00:13 11:00:13 11:50:57 11:24:35 11:43:34 11:26:35 10:52:28 11:00:13 11:20:57 11:24:10 11:24:10 11:24:35 11:41:32 11:42:38 11:42:38 10:49:06 10:49:06 10:49:06 11:08:05 11:06:38 11:12:35 11:39:44 11:09:59 11:41:32 11:41:32 11:41:32 11:42:38 11:08:05 11:06:19 11:06:19 11:06:38 11:39:44 10:42:25 11:06:38 11:12:35 10:42:25 11:12:35

DHC DHC DHC DHC DHC DHC 7/29/08 7/29/08 7/29/08 7/29/08 7129/08 7/29/08 2632108,000 2559 2567 2570 2603 200,000 210,000 150,000 102,000 00 9.80 9.80 9.80 9.80 9.80 9.80 Westlink Peter Salud Westlink Peter Salud BH ChuaFHC AbacusPeter Salud Abacus Peter Salud Rogelio Garcla Omar Guinomla Omar Guinomla Venture10:46:05 Rogello Garcia Rogello Garcia. Omar Guinomla "Venture Venture10:42:55 Venture10:42:38 Venturej10:42:31 Venture! 10:44:34 10:44:10 10:42:25 10:42:25 10:44:10 10:44:10 10:42:25

11 Records, pp. 89-106.

In the Matter of: Acesite (Phils.) Hotel Corp SEC En Banc Case No. 09-11-244 Page 6 of 10

The fact that this went on continuously from June 19 to July 22, 2008 cannot be a mere coincidence. The frequency of the transasctions should have alerted appellants to inquire on the circumstances of their BOs and buyers of said shares. Appellants could have exercised due diligence and made independent inquiries to their BOs on why said shares are being traded frequently during the span of the Covered Period and determined who purchased said shares with the resources they have on hand. Unfortunately, appellants failed to do the same without any justifiable reason.

Second, there is collusion between the BOs involved herein considering their relationship with each other. Appellants Venture and Aguilar cannot deny that their buy and sell logs show that they were all sold and bought by the same set of people among themselves, namely: (a) Peter S. Salud, (b) Rogelio D. Garcia and (c) Omar M. Guinomla, who are all clients of Appellant Venture. It is true that there is nothing illegal in the statement of appellant that "it is not uncommon for a group of friends or peers to come to an agreement to gradually divest their holdings in a particular issue"12 However, the act of the BOs of appellants coming together and agreeing to manipulate the DHC by making an artificial image of active trading as evinced by the frequency of their transactions with each other during the Covered period is unlawful.

The appellants even admitted during the conferences of this case that they knew that their clients were related to each other and that Rogelio D Garcia is a director and consultant of Wellex Industries, Inc., the majority owner of the shares of Waterfront Philippines, Inc., as disclosed in his Customer Account Information Form. Waterfront Philippines, Inc., in turn. owns majority of the shares of Acesite Hotel Corporation (DHC)13. Appellant Aguilar also stated in said conferences that Peter S. Salud, Omar M. Guinomla and Rogelio D. Garcia were all referred by one Felino Lee and that the latter was authorized by said persons to facilitate their transactions.14 This cannot by denied by appellants herein since they have knowledge of this information, which should have made them cautious in handling their clients' transactions.

Lastly, there seems to be no valid commercial reason to justify the sudden demand for the DHC shares and the increase of its price during the covered period. The defense of appellants that the news article of the Philippine Star dated July 18, 2008 stating "Acesite eyes schemes to fund renovation of Manila Pavilion" motivated said demand and price was belied by the fact that Acesite denied any knowledge or information relevant to the unusual trading of its shares during the PSE's query about

13 Records, p. 8. 12 Id. P. 54. T Id. p.I1.

In the Matter of: Acesite (Phils.) Hotel Corp SEC En Banc Case No. 09-11-244 Page 7 of 10

the ceiling price alert on June 19, 2008.15 The latter's statement just shows that Acesite was not expecting any sudden price movement or demand of its shares during the Covered Period.

The immediate buy and sell transactions of herein appellants, coupled with the fact that the appellants knew that their BOs are related to each other falls squarely within the definition of Improper' Matched Orders under the IRR. As a result, prices of the DHC shares unusually fluctuated during the Covered Period which might have induced the public to invest over said shares on the belief of profitability. Appellants as well as their clients (BOs)

appellants herein who are dealing with each other. Such is also the very essence of the manipulative practice of Painting the Tape under the IRR. being traded from June 19 to July 29, 2008, when in fact, it was only the were able to make it appear to the public that the shares of DHC were actively

Improper Matched Orders resulting to Painting the Tape Trades of the DHC Sec. 24.1 of the SRC, in relation to Section 24.1 (b)-1 of its IRR through Shares during the Covered Period. Thus, appellants are liable for committing Manipulative Practices under

Lack of information or access to information on the part of the appellants is untenable.

As to the defense of appellants Venture and Aguilar of lack of knowledge or access to such information as would lead them to suspect that the BOs involved herein were in collusion with each other to manipulate the prices of the DHC shares, the same deserves scant consideration.

Paragraph 2 and 3 of Section 24.1(b)-1 of the Amended IRR of the Securities Regulation Code is clear that it mandates Broker-Dealers to consider several circumstances before dealing with and trading securities on behalf of their clients, to wit:

I15 , p. 6.

In the Matter of: Acesite (Phils.) Hotel Corp SEC En Banc Case No. 09-11-244 Page 8 of 10

security or with respect to the market for, or the price of, any security. -"2. It shall be unlawful for any Broker Dealer, associated person or salesman of a Broker Dealer (hereinafter collectively referred to as securities, on account of any other person where the registered other person intends to create, or taking into account the suspects that a person has placed the order with the intention of creating, a false or misleading appearance of active trading in any "registered person"), to make a bid or offer for, or deal in person intends to create, or the registered person is aware that the circumstances of the order, the registered person reasonably

3. In considering whether an order violates Section 24 of the Code, a Broker Dealer shall consider:

misleading appearance of active trading in or with respect to the market for, or price of, any security. of entry of the order; person, may have an interest in creating a false or misleading d. Whether the order is accompanied by settlement, delivery or when put together with orders which appear to make up the series, the f. Whether there appears to be a legitimate commercial reason for that person placing the order, unrelated to an intention to create a false or the market for, and/or the price of, the securities appearance of active trading in any security or with respect to the security arrangements which are unusual; e. Whether the order appears to be part of a series of orders, whether order or the series is unusual having regard to the matters referred to in this paragraph 3; and a. Whether the order, or execution of the order, would materially alter b. The time the order is entered or any instructions concerning the time c. Whether the person on whose behalf the order is placed, or another person who the Broker Dealer knows to be a related party of that market for, or the price of, any security:

transaction/s is manipulative." (Emphasis supplied) Failure to consider these factors shall raise a presumption that a

Said provisions of the IRR compel BDs to go the extra mile and conduct independent inquiries to determine the circumstances surrounding the shares they are dealing with in order to protect the market from being rigged by individuals who intend to profit from said market manipulations. Otherwise the BDs are presumed to be engaged in manipulative transactions as stated above.

Here, appellant BDs failed to overcome the presumption under the law. The appellants, as BDs, knew that the DHC shares were not being actively traded during that time. Furthermore, the news article regarding the

In the Matter of: Acesite (Phils.) Hotel Corp. SEC En Banc Case No. 09-11-244 Page 9 of 10

innocent investors to deal with the same to their damage and prejudice. DHC shares, when in fact there was none and which might have caused appellants failed to do so and still proceeded to pursue said transactions during the covered period which resulted to an appearance of active trading. The same mislead the public into believing that there was active trading of said has no expectation that their shares will be actively traded during time. The presence of these suspicious circumstances, coupled with the sudden active trading of the DHC during the Covered Period should have triggered the appellants to make an inquiry on said transactions. Despite the same, the renovation of the Manila Pavilion is not enough to justify the sudden they have no information regarding that matter which shows that Acesite active trading of the DHC. To reiterate, when Acesite was asked regarding the sudden fluctuation of their shares, the latter stated that

have been possible with the participation of appellants herein. the law to conduct their own inquiry over the transactions of their BOs with liability solely to their BOs considering that they were the ones who primarily dealt with said transactions. Moreover, said transactions of the BOs would not respect to the DHC shares. Information over the buyers of the DHC shares inquiry with the Philippine Stock Exchange. Appellants cannot pass the during the Covered Period are easily accessible by making a simple To reiterate, appellants, as BDs, have all the resources and duty under

herein and the same warrants the liabilities of the appellants for their participation over said manipulative transactions. already paid the administrative penalties imposed upon them by the EIPD16 This already constitutes an admission on the part of the BOs for the charges Finally, it is worthy to mention that the BOs of the appellants have

the transactions of their BOs as mandated by the Securities Regulation Code and its Implementing Rules and Regulations. Therefore, appellants cannot allege lack of access or information over

Memorandum of Appeal filed by appellants is hereby dismissed for lack of merit. Appellants Venture Securites, Inc. and Adora M. Aguilar are hereby ordered to pay the administrative fines of ONE HUNDRED THOUSAND WHEREFORE, premises considered, the Notice of Appeal and

PESOS (PHP 100,000.00) and FIFTY THOUSAND PESOS (PHP 50,000.00) for violation of Section 24.1 of the Securities Regulation Code, in

16 Records. P. 120-121.

In the Matter of: Acesite (Phils.) Hotel Corp. SEC En Banc Case No. 09-11-244 Page 10 of 10

relation to Rule 24.1(b)-1 of its Amended Implementing Rules and Regulations17

SO ORDERED.

Pasay City, Philippines; 8 August 2019

EMILIO IQUINO

Chairperson

ANTONIETA F. IBE xmir dotno.fe Commissioner EPHYRO LUIS B. AMATONG 9Aww Commissioner

JAVEYPAUL D. FRANCISCO Commissioner KELVIN LESTER K.LEE Commissioner

17 SEC Consolidated Scale of Fines, Part A (9.3) .