MANILA - A Securities and Exchange Commission (SEC) official explained why it spared the Romualdez-led Benguet Corp. from a trading suspension, which the Philippine Stock Exchange (PSE) was supposed to push through on Tuesday.

SEC spokesman Gerard Lukban said in a telephone interview that the corporate regulator intervened because it had to act on the complaint of Benguet and to get the PSE’s side before making any decision.

“The PSE has an SRO [self-regulatory organization] so they would have to regulate their own ranks—but their decisions are ‘appealable’ to us,” Lukban said in a telephone interview.

The Exchange had planned to suspend trading of Benguet shares for 30 days starting October 27 after the mining company reportedly violated the PSE’s nondisclosure rules regarding its debt now worth P1.2 billion.

The PSE said in its decision dated October 19, that Benguet Corp. failed to disclose that it had received several notices of default from the Philippine National Bank Trust Banking Group (PNB). In response, Benguet wrote the PSE, stating the PNB “still has to issue the declaration of default, subsequent to the notices of default earlier transmitted to you.”

SEC overstepped bounds

An analyst, however, noted that the SEC may have overstepped its bounds since the PSE’s decision was based on a violation of its own disclosure rules by a listed company.

“That is market-moving information. Benguet should have informed the PSE and the investing public immediately. Now whether they believe that they are not in default...they should state so in the disclosure as well,” said Eagle Equities president Joey Roxas in a separate interview.

“I think the SEC shouldn’t have meddled in this matter as it is within PSE jurisdiction,” he said, while noting that the signal this sends to investors “is not good.”

The regulator has given the PSE 5 working days to respond to Benguet's letter.

Lukban said the SEC would like to hear both sides before making its decision.

In a statement, PSE president Francis Lim said the exchange will provide the SEC with relevant information on Benguet’s violations, as well as its basis for the penalties.

The PSE implements a one-month trading suspension after a company violates its nondisclosure rules for the third time within a 12-month period.  A company is fined P50,000 and P75,000 for its first and second violations, respectively, while a fourth violation may be ground for delisting from the exchange.

Tuesday trading

Shares of Benguet Corp. rose 17.07 percent to P12 on yesterday’s close.

Prince A. Yeung of AB Capital Securities Inc. noted that the increase may have been due to a few investors buying back their Benguet shares after selling off the previous week when the trading suspension was announced by the PSE.

A trading volume of 15,100 shares valued at P179,450 is considered minimal since Benguet’s shares are not heavily traded, added Yeung.

In a disclosure last Thursday, Benguet said it submitted a debt settlement proposal to its creditors, without giving additional details.

The company’s debt woes started in the late 1980s when it obtained consolidated loans of P4.2 billion to finance mining projects, in particular its Antamok Gold Project in Itogon, Benguet province which turned out to be unprofitable.