Executives at delisted company Calata Corp. have been ordered to pay P8 million in fines for making misleading and exaggerated statements about the Mactan Leisure City project.
Their joint effort, the Makati City Regional Trial Court has determined, materially influenced the investing public to purchase company shares in 2016.
In a decision promulgated on 28 May this year, Branch 148 of the Makati City Regional Trial Court found Joseph H. Calata, company chairman, president and CEO, guilty of two counts of violation of the Securities Regulation Code.
His corporate secretary, compliance and corporate information officer Jose Marie Fabella was also found guilty of two counts of violation of the same law.
Both were ordered to pay fines of P4 million each, or serve time in prison should they fail to pay the fines on account of insolvency.
The complaint against Michael I. Foxman, CEO at Sino-America Gaming Investment Group LLC and Calata’s partner at the Mactan Leisure City project, was archived.
He was similarly charged but remains at large.
The Securities and Exchange Commission began monitoring Calata Corp. following a sudden surge in the volume of shares traded on the Philippine Stock Exchange on August 23, 2016.
Fabella, with the consent and authority of Calata, was found to have made misleading statements to the PSE about its partnership with Sino-America Gaming and Macau Resources Group Limited in developing the $1.4 billion integrated resort and casino project known as Mactan Leisure City.
Calata told regulators the Mactan Leisure City would begin operations in 2020 as a game changing event seen generating gross annual revenue of P55.74 billion.
Trading in Calata shares surged 2,455 percent the day the disclosures were made, followed by a 196.41 percent jump the next trading day.
“The August 23, 2016 disclosure contained unfounded promises and exaggerations,” the court said.
Such were “not clearly referred to as mere forecasts and (were) couched and exaggerated to such extent that the public may be misled in thinking that the project would start its operations in 2020, generate a certain amount of revenue and entail job opportunities”.
These were disclosed although the business did not apply for a license at the Philippine Amusement and Gaming Corp., the court said.
“Calata Corp. did not disclose, even in general terms, prior correspondence between accused Foxman and PAGCOR, seemingly implying an unlikelihood that the ‘Mactan Leisure City’ project would materialize as projected,” the court said.
In a disclosure dated August 26, 2016, the PSE asked Calata Corp. to clarify its partnership agreement with the Mactan Leisure City project.
The court ruled a subsequent disclosure was likewise misleading and did not contain a statement as to prior correspondence with Pagcor and whether or not an application for an integrated resort casino permit was already submitted.
Previously, eight Calata shareholders were indicted in trade activities that artificially inflated the price of its shares and consequently induced the public to buy them.
