Stock broker Eusebio H. Tanco has formally declined his nomination as director of the Philippine Stock Exchange (PSE) for the Board elections on July 1 after his brokerage Venture Securities Inc. has been penalized by regulators in relation to illegal transfers of shares worth P700 million.
In a statement, Tanco said cited “delicadeza” for declining his nomination amid issues being “unjustifiably” raised against VSI.
In a June 16-letter to PSE Chairman Jose T. Pardo, Tanco said “Recent events which, unfortunately and unjustifiably, have besmirched the reputation of Venture Securities and its officers and employees compel me, out of delicadeza, to decline the nomination for membership in the Board of the Exchange.”
Pardo described the decision of Tanco as a move to “take the moral high ground and not put at risk the reputation of an institution he holds in high esteem - the PSE.”
“All the more admirable because it was a decision he made without knowing the outcome of Nomelec’s (PSE Nominations and Elections Committee) decision. Truly laudable and a noble act,” said Pardo.
In the same letter, Tanco said Venture intends to contest the findings of the Special Hearing Panel of Securities and Exchange Commission (SEC) which ordered the revocation of the license of VSI in connection with its alleged role in the anomalous transactions of people connected with R&L Investments.
“The investigation into the anomalous conduct of one Marlo Moron of R&L Investments has unnecessarily dragged Venture Securities. Records show that Mr. Moron, acting as both trader and settlement clerk, in violation of the SEC rules for a brokerage firm, executed EQ trades indicating that he has the access code of R&L Investments to utilize the PCD system,” Tanco said.
He added that, “(Moron) was also in charge of keeping the books of accounts — a virtual one-man show fully in control of the various aspects of brokerage operations. This could not have happened except with the obvious knowledge and consent of the owners of R&L.”
Using the the access code, Moron transferred shares of R&L clients to one Julieto Sulapas. Tanco said the fraudulent transfer took place exclusively within R&L and that no broker dealing with the shares of Sulapas would know that the shares do not belong to him.
“Venture was never involved in the fraudulent scheme of Mr. Moron and R&L and is, therefore, as much a victim as the clients of R&L,” clarified Tanco.
He said it was a complete surprise for VSI it became the subject of an investigation and has been made to appear as complicit in the anomalous schemes of Moron.
“These machinations of Mr. Moron have been going on for over seven years and have apparently escaped the attention of the Capital Markets Integrity Corporation, the guardian of the morals of the brokerage community. Had the CMIC bothered to look at R&L and its activities, the CMIC would have easily noticed what was happening as they are better equipped to detect this kind of transactions violative of the rules of the exchange,” he said.
Tanco noted that,, “the fact alone that Mr. Moron was both trader, settlement clerk, and keeper of the books of accounts should have been discovered by CMIC.”
He also said that, “for years, VSI itself has been audited by the CMIC and it has found no evidence of any wrongdoing. As a broker, Venture had every right to be protected by the CMIC and to rely on CMIC's findings.”
“It is truly incomprehensible that CMIC — for all of over seven years—was not able to discover the discrepancies/anomalies in R&L's clients’ position vis-a-vis the balances In the PCD system, something which a standard auditing procedure called ‘confirmation' would have easily shown,” said Tanco.
While Tanco was not held personally liable by the SEC, he said that it was in the best interest of the PSE to decline his nomination.
“The Exchange, after all, is bigger than any individual broker and it is my belief that all our efforts should be directed to the protection and preservation of the image of the Exchange. My only wish is I or an acknowledgement that the real guilty Parties will be called to account for this sorry state of affairs,” he said.