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Commodity
futures. If you want to sell commodity futures, you have to get a
license from the SEC. And they are regulated by rules. At the moment,
there is no commodities market here.
But in the Bonapal case, the Court said that the
buyer of the commodities does not intend to physically take delivery of
the commodities but the gains and losses will have to be entered in his
ledger, that is gambling. Therefore that is prohibited by law. If he
incurs losses, the broker cannot ask him to pay for the losses and the
broker will have to return the margin that he made. Well the Court said
you are merely speculating on the rise and fall of the commodities.
But that’s how trading is done. In the market, the
volume of trading will now be more than one trillion dollars a day in
Chicago. They want to buy gold, silver, wheat, pork. If you’ve read
that book. Liar’s Booker. There was this investment adviser in
New York with a very sharp mind. He can always see the economic
implication of events. The Chernobyl incident was reported in the
papers. It is about that nuclear plant in Russia which developed a
leak. He immediately called up his customers and said “Buy Potatoes.”
Because the radiation has spread all over Europe, the potato crops in
Europe were condemned. There was a shortage of potatoes. So they had
to import from the United States so the price of potatoes went up. Now
these people, they will not take delivery of the potatoes, they will
just post it in the ledger. The Supreme Court said that is gambling.
And the Code mentions the
grounds for rejecting registration or revoking registration:
- That the
issuer:
- Has been
declared insolvent
- Has
violated the provisions of this Code or implementing rules or
orders of the SEC
- Has engaged
or is about to engage in fraudulent transactions
- Has made
any false or misleading representations about material facts
- Has failed
to comply with the conditions imposed by SEC
- The
registration statement is false
- The officer,
director or any underwriter has been convicted of any offense
involving moral turpitude or fraud.
That’s what happened to Puerto Azul. They want to make a
public offering. You know our office have a monopoly on these initial
public offerings but some law offices want to break into that. We
usually charge a minimum of P500,000. A pool of lawyers will be working
overtime for several months making due diligence audit. There was one
law office which offered to do that for Puerto Azul for P150,000.
There’s no way you can make money there. They just want to be able to
break our monopoly and after that, they are hoping to make up for that
in future offerings. Parang negosyong Instik, magpapalugi ka muna
tapos babawi ka later. And what happened, the Philippine Stock
Exchange refused to sell that in the stock market. So they went to
court. The SEC ordered the Philippine Stock Exchange to register that,
they refused, they appealed to the court of appeals. The Court of
appeals affirmed the ruling of the SEC. The decision came after a very
short period. It was penned by a notorious justice who was corrupt. It
appealed to the Supreme Court, the Supreme Court reversed. The Court
said, indeed it is not prudent to offer those shares to the public
because first, the Marcoses said we own those shares, the Actionis
Parnilias (? I have no idea what this is, sorry) are just are
dummies. And then the property where Puerto Azul is located is part of
a naval reservation. They were able to get the title although there was
no presidential proclamation declaring it open for disposition to the
public. The Supreme Court said it is not prudent to sell those shares
to the public under the circumstances.
Now,
tender offer. If a person or group of persons acting together
intends to acquire:
a.
15% of the equity of a corporation
listed in the stock market OR one with a capital of at least 50
million pesos and has at least 200 stockholders who own at least 100
shares each OR
b.
30% of the equity of such corporation over
a period of 12 months
They should make a tender
offer to the stockholders by filing with the SEC a declaration to that
effect.
They will file with SEC
that “We are making a tender offer. We intend to buy shares of this
corporation.” And then everybody else who is interested in selling
would then tell the SEC that “We intend to sell.”
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