SEC affirms ₱1-M fines vs. NOW Corp. over misleading market disclosure

The Securities and Exchange Commission (SEC) en banc has denied the appeal of NOW Corp. and its chairman, Mel Velarde, affirming the P1 million fines each for supposedly violating securities law. 

In a 23-page decision, the SC en banc stated that the appeal was “bereft of merit,” upholding two earlier directives of its Enforcement and Investor Protection Department (EIPD) and ordering NOW Corp. and Velarde to pay the penalties.

Further, the SEC directed the EIPD to investigate the potential liability of other members of NOW Corp.’s board of directors, with the aim to determine if they could be held accountable in their personal capacities.

The sanctions were “without prejudice to any subsequent findings of liability against said directors,” the SEC said. 

The decision was penned by Commissioners Javey Paul Francisco, Karlos Bello, Mcjill Bryant Fernandez and Rogelio Quevedo.

GMA News Online reached out to Velarde and NOW Corp. for their comment. The message will be updated once a response is received.

In a disclosure to the Philippine Stock Exchange, NOW Corp. said that “foregoing incident has no impact on the financial condition and business operations of the company since the company intends to further appeal the decision to the appropriate appellate court.”

The case stemmed from a November 2021 disclosure issued by NOW Corp., following a news report stating that the government—through the National Telecommunications Commission (NTC)—was seeking resolution of NOW Telecom’s alleged P2.6-billion unpaid fees.

In response to the Philippine Stock Exchange, NOW Corp. said it was not a party to the Supreme Court case and that it “has no knowledge of the specific details surrounding the alleged motion,” invoking the sub judice rule.

The SEC rejected that defense, calling it “a semantic evasion and collapses upon scrutiny,” and ruled that the disclosure was “untenable and completely misleading.”

“Certainly, the public was not concerned with the procedural filing of the NTC Motion; but was concerned with the alleged PHP 2.6 billion liability,” it pointed out.

The SEC also underscored that disclosure duties under the Securities Regulation Code (SRC) “is not a mere checklist,” stressing that “the substance, not just the form, of the disclosure is paramount.”

The SEC further rejected reliance on the sub judice rule as “clearly misplaced.” 

When it comes to Velarde’s personal liability, the SEC said the case “did not involve piercing the corporate veil but the enforcement of statutory responsibility imposed on corporate officers.”

It described as “incomprehensible” Velarde’s claim of ignorance of a “multi-decade, multi-billion-peso dispute threatening their primary asset.”

“When Mr. Velarde, acting for NOW Corp., made or caused the making of a misleading statement, he personally violated Section 24.1(d) of the SRC,” the SEC said. —VAL, GMA Integrated News