MANILA, Philippines – The Pasig Regional Magistrates ‘Court convicted a local stock broker for illegal stock trading in connection with BW Resources’ stock price manipulation scandal 22 years ago.
Johnny Yap, then president, director of sales and director of Solar Securities Inc., was sentenced to 14 years in prison and fined 1 million pesos for illegal transactions that resulted in a 1462% price hike. of the stock of BW, a deficit game stock.
In a ruling dated May 7, Pasig RTC Branch 67 was found guilty beyond a reasonable doubt of violating section 26 (a) (I) (1) of the Revised Securities Act, now section 24.1 (a) (i) of the Securities Regulation Code (SRC).
The Securities and Exchange Commission filed a criminal complaint against Yap after Solar Securities committed 142 charges of buying and selling for BW which constituted “blank sale” transactions during the months of June and October 1999 .
Wash sales refer to transactions in which the buyer and seller of the share share a beneficial owner.
A special operations group (SOG) formed by the SEC in August 2000 to investigate the matter found that Solar Securities transactions were blank sales not only because the brokerage was both the buyer. and the seller in the 71 buy orders and 71 sell orders. , but also because the bids and auctions had been made at very short intervals.
BW shares were trading at 80 centavos each at the start of 1999.
The company’s shares rose steadily that year, and by October BW’s shares had reached a price of 12.50 pesos each, at the same time Solar Securities executed its wash sale trades.
This despite the fact that BW recorded losses of 10.84 million pesos in 1999 and had no business fundamentals.
“[N]o another conclusion can be drawn, but that these series of business transactions were executed with the intention of creating a false or deceptive appearance of active trading or a deceptive appearance in relation to the BW stock market, ”the ruling states. .
“Undoubtedly, the transactions in question were knowingly executed by Solar for no other purpose than to manipulate the market.”
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