SEC cites new PSE chief for conflict of interest

By Danessa O. Rivera

08/18/2010

The Securities and Exchange Commission (SEC) is questioning the recent designation of Val Antonio Suarez as president of Philippine Stock Exchange (PSE) due to conflict of interest as his wife sits as an officer of a brokerage firm but the PSE said yesterday it is disputing the regulator’s view.

In a statement, PSE chairman Hans Sicat said the PSE board had expressed its full support to Suarez as president and chief executive officer (CEO) and that he has met all the qualifications of the bourse.

The PSE board reacted to the SEC decision finding the PSE in violation of the Securities Regulation Code (SRC) which provides that “the president and other management of the Exchange (will) consist only of persons who are not members and are not associated in any capacity, directly or indirectly, with any broker or dealer or a member or listed company of the Exchange…”

The same rule also applies to the chief operating officer of the PSE which was the post Suarez held before being appointed bourse president and CEO.

The SEC noted that Suarez is married to Milagros Cecilia Dollendo Suarez who was vice president and head of sales and marketing of JP Morgan Securities Philippines Inc. and was promoted to president, managing director and acting PSE nominee of the firm as of July 1.

However, Sicat who also heads the Corporate Governance and Search Committees said “the Corporate Governance as well as the Search Committees of the PSE strongly believe that Mr. Suarez possesses the qualifications, skills, motivation and energy for handling the CEO job of the PSE.”

He also said the PSE obtained two separate legal opinions from two leading law firms in the country, stating that the appointment of the new bourse chief was not covered by the prohibition in the SRC during the search period and added that the reply of the PSE, together with the legal opinions of its external counsel, was submitted to the SEC earlier.

Sycip Salazar Hernandez and Gatmaitan Law managing partner Rafael Morales said Section 33.2 of the SRC does not disqualify Suarez since this applies “only if he himself becomes associated with any broker-dealer or affiliated with it for a period of at least two years prior to his PSE appointment.”

Angara Abello Concepcion Regala and Cruz Law (ACCRALAW) also said that the provisions under the SRC “do not expressly restrict relatives by affinity or consanguinity of a broker or dealer from being appointed as president or management of an exchange.”

ACCRALAW also pointed out that under the current organizational set-up of the PSE, there exists strict regulatory independence between its Market Regulation Division (PSE-MRD) and the Office of the President and CEO of the PSE.

The PSE-MRD reports to and is governed by the independent Market Integrity Board, which was created in 2004 precisely to ensure that neither the president and CEO of the Exchange nor the management of the Exchange would exert any influence over the regulatory activities of the PSE-MRD.

“The PSE Board looks forward to working with Val in his new capacity and also continuing to work with the Securities and Exchange Commission in promoting the development of the country’s capital markets,” Sicat said.

Meanwhile, the PSE wants to finish before the end of the year discussions with Ayala Land Inc. (ALI) over plans for putting up the prestigious unified headquarters of the bourse in Bonifacio Global City while it also considers proposals from rival developers.

Suarez said the PSE board has directed him to ensure that the PSE transfers to its new office in Bonifacio Global City by 2014.

Since it may take three years to build the new PSE headquarters and office space for brokers, Suarez said they need to conclude talks this year so they can start construction by next year.

The transfer of the PSE headquarters to a lot donated by Fort Bonifacio Development Corporation has been delayed for years partly because of the change of control from Metro Pacific Investments Corporation to ALI.

ALI is already host to the PSE’s Makati offices which it had donated to the PSE. However, the PSE is now free to leave both its offices in Ortigas and Makati since the deeds of donation required it to occupy them for only 10 years and this has already lapsed.

The MPIC-led FBDC had donated to the PSE a choice corner lot measuring 2,182 square meters in the middle of Bonifacio Global City because of the prestige of having the stock exchange in its financial district.

However, after ALI took control of FBDC, it had made a fresh proposal to the PSE to substitute the lot with a bigger 3,500 sqm. property near where the Shangri-la Hotel is being built.

Many changes have also been made in the design of the proposed building which is supposed to be jointly owned by the PSE, as land owner, and ALI as developer.

Suarez said they are will insist on using the original donated lot if the PSE cannot come to terms with ALI on the substitute property and the PSE building and they will also be considering proposals from other developers.

He noted that all major developers have expressed interest in putting up the PSE headquarters through a joint venture agreement and the PSE is hoping that it will not have to spend a single cent for the building.

Back to top

For comments about this website:Webmaster@tribune.net.ph
The Daily Tribune © 2006