The Securities and Exchange Commission (SEC) has rejected on appeal claims of innocence by Now Corp. on material information affecting its subsidiary and its failure to disclose them, resulting to the imposition of a P1 million fine.
The SEC’s Enforcement and Investor Protection Department in an order dated 16 February 2024 threw away the appeal filed by NOW Corp. chief executive Mel Velarde for lack of merit, saying the business has misled the investing public by its failure to disclose material information impacting subsidiary firm NOW Telecom.
Velarde told regulators he did not know subsidiary firm NOW Telecom owed the National Telecommunications Commission P2.6 billion in unpaid supervision and regulation fees as well as spectrum user fees it was contesting all the was to the Supreme Court where the matter pends.
In an order dated 16 February 2024, the SEC denied his request for reconsideration finding NOW Corp. administratively liable for non disclosure of material information.
In that order, the SEC maintained NOW Corp. and Velarde “cannot simply deny that they were unaware of the details surrounding the motion filed by the NTC” before the Supreme Court.
“To be simply dismissive about it and to nonchalantly disclose that ‘The company has no knowledge of the specific details surrounding the alleged Motion filed by the [NTC]’ created a misconception among the investing public,” the SEC said.
According to the corporate watchdog, “such disclosure is misleading as NOW Corp. and Mr. Velarde are fully aware of the specific details surrounding the motion or the case, that is, the unpaid SUF and SRF of Now Tel with NTC.”
“In this connection, it is clear that there was concomitant failure on the part of NOW Corp. and Mr. Velarde to make full, accurate and timely disclosure of a material fact or information about securities as mandated compliance to a listed company constitute a violation of Section 24.1 (d) of the Securities Regulation Code,” the SEC said.
The SEC also dismissed as “unavailing” or futile Now Corp. and Velarde’s claim that disclosing details surrounding the NTC motion would violate the sub judice rule.
“It must be emphasized that what sub judice rule prohibits is to give comments and disclosures pending judicial proceedings. In this particular case, NOW need not necessarily give its comment and disclosure regarding the Motion pending with the Supreme Court,” the SEC said.
“What is required of NOW to disclose are ‘relevant information not reported in the news article’ which encompasses ‘financial results and other information which is material to investor’s decision. Hence, we do not find any application of the sub judice rule in this particular case.”
