President investing in stock market 'not right,' PSE director says

A head of state placing investments in the stock market would not seem right, a director of the Philippine Stock Exchange (PSE) who also happens to be a family friend of President Gloria Macapagal Arroyo said. PSE director Vivian Yuchengco told GMANews.TV that the infamous Best World (BW) Resources Corp. price-fixing scam could be one of the best examples of what happens when a country’s chief executive gets involved in the stock market. “I was very critical about [former President Joseph] Estrada's investments in the stock market so I think the President can't invest in the stock market," Yuchengco said. BW resources' major shareholder, Dante Tan, was perceived to be a crony of the ousted president. BW Resources gained notoriety after its trading price made a phenomenal 5,250-percent leap from a stock price of 80 centavos in October 1998 to a whopping P145 in October 1999. A government inquiry later found out that Tan had engaged in stock manipulation by heavy-share buying and selling of his shares to friends and clients at discounted rates. Former Securities and Exchange Commission chairman Perfecto Yasay accused Estrada of making an P800-million profit from the sale of shares in the BW Resources Corp. Mrs. Arroyo's wealth is currently the subject of public scrutiny after a Philippine Center for Investigative Journalism report revealed that Mrs. Arroyo's stocks doubled from P55 million in 2006 to P110 million in 2008. Economist Solita "Winnie" Collas-Monsod earlier said it was "unethical" for a president to have stock investments due to a possible conflict of interest. Mrs. Arroyo's stature could affect trading for certain stocks, not to mention the privilege she could have in getting insider information about stock price movements, Monsod said. Yuchengco said that politicians, especially heads of states, should leave stock investments to their relatives who do not hold public office. "The rest of the family who is not in politics and government can invest," she said. Yuchengco had led the walkout at the PSE at the height of protests against Estrada for the supposed stock manipulation of his alleged associates. Yuchengco's First Resources Management and ATR KimEng Securities are among the firms being suspected of brokering for the Arroyo family. When asked if her firm, of which she is owner and president, was indeed the Arroyo family's stock broker, Yuchengco refused to give confirmation. “I'm a broker. I can't reveal to you my clients," Yuchengco said. But the PSE director admitted to being close with the Arroyo family. “Since I was a teenager, I've been close to the family. They have been good friends. I am a godmother of Nicole," Yuchengco said, referring to the daughter of Marilou Arroyo, sister of Mr. Arroyo and Congressman Iggy Arroyo. But unlike Yuchengco, Randy Roxas, chairman and president of ATR KimEng Securities, said there was nothing wrong if Mrs. Arroyo traded in the stock market so long as it was done under "governance guidance." Roxas categorically denied that his firm was in any way connected with the investments of the first family in the bourse. “We are bound to protect the stockbroker-client relationship. We may only reveal our clients if the exchange requires us to do so but I am categorically denying that we are involved in the investments of the Arroyo family in the stock market," said Roxas. He also stressed that 90 percent of the stock brokerage's clients are institutional investors. “Only 10 percent of our clients are retail investors," Roxas told GMANews.TV in a separate interview. First Gentleman Jose Miguel Arroyo's lawyer, Ruy Rondain, said in a press conference in Malacañang that companies in which Mrs. Arroyo has shares can be easily checked with the PSE. However, sources from the bourse said otherwise. It would be nearly impossible to trace the investments of the Arroyo family in the stock market, they said. For one, it would be illegal for any broker to divulge the list of his clients, the brokers said. “Second, how can you be sure that a broker who would claim that he handles the investments of the Arroyo family in the stock market would be telling the truth? What if that person has a motive? At best, all we have are speculations," the exchange insider said. Despite these speculations, the Arroyo family could have transacted with a broker who was not identified with them, the same source said. “It would be a miracle from heaven if a paper trail of those investments would be traced," the source said. - GMANews.TV