The Department of Justice (DOJ) has indicted Abra Mining & Industrial Corp. (AR), its directors, officers, transfer agent, and certain stockholders for the unauthorized and fraudulent trading of shares from 2015 to 2019.

Acting upon the complaint filed by the Securities and Exchange Commission (SEC), the DOJ issued a resolution on August 12 after state prosecutors found prima facie evidence with reasonable certainty of conviction to charge Abra Mining for violation of the Securities Regulation Code (SRC) in relation to the Revised Corporation Code.

The DOJ also implicated Abra Mining officers. The firm and its officers were likewise charged for violation of Section 26.1 of the SRC, together with the stock transfer agent, as well as other stockholders.

Section 8 of the SRC states that securities shall not be sold or offered for sale or distribution without a registration duly filed with and approved by the SEC, while Section 26.1 provides that it shall be unlawful to employ any device, scheme, or artifice to defraud, in connection with the purchase or sale of any securities.

“The indictment of AR, its officers, stock transfer agent, and stockholders marks a vital step in upholding trust and confidence in our capital market,” SEC Chairperson Francis Lim said.

He added that, “The SEC remains steadfast in its commitment to hold accountable any entity found to have violated that trust, and ensure that they are brought before the proper venues to answer for their actions.”

The SEC filed a criminal complaint with the DOJ in May 2024, after discovering that Abra Mining had issued shares in excess of those registered with the SEC and listed on the Philippine Stock Exchange (PSE).

These unregistered and unlisted shares of stock were then offered to the public through the PSE upon lodgment with the Philippine Depositary and Trust Corp. (PDTC).

An investigation by the SEC Markets and Securities Regulation Department revealed that the number of AR shares lodged with PDTC totaled 258.96 billion as of February 2021.

However, the registration statement rendered effective by the SEC covered only 95 billion Abra Mining shares, while the number of shares authorized for listing in the PSE totaled 72.95 billion AR shares only.

The number of AR shares lodged with PDTC also exceeded the 99.29 billion issued shares, and 199.29 billion outstanding shares indicated in the company’s financial statements.

That Abra Mining issued or traded shares in excess of its registered or listed shares was reflected in the PSE’s database and the company’s public ownership report and general information sheet covering the years 2014 to 2019.

“It can be gathered from [Abra Mining’s] reported shares…that [the company] knew the existence of its unregistered shares considering the declarations made in the aforementioned public documents, which Abra submitted as part of its reportorial requirements,” the resolution read.

The DOJ noted that circumstances relating to the unregistered shares from 2015 to 2019 appear to follow a specific scheme designed to defraud or deceive the public into investing in worthless securities.

The scheme involved Abra Mining entering into transactions with respondents Leila and Ferdinand Collado, Gacelo, Jubileum Air and Sea Logistics, and Andrei Vincent Freight Services involving the unregistered or over-issued shares. Such shares were sold below par value and were not fully paid.

Despite failing to pay for the shares, Abra Mining proceeded with issuing the corresponding stock certificates in favor of the aforementioned persons and entities. These unregistered shares were facilitated and validated by Asian Transfer and were then lodged with PDTC through their respective brokers.

The unregistered shares were eventually traded or circulated to the investing public under the guise of legitimately issued shares, resulting in huge monetary gains for the respondents.

“[Leila and Ferdinand Collado, Gacelo, Jubileum Air and Sea Logistics, and Andrei Vincent Freight Services] are deemed to have connived with [Abra Mining] and its responsible officers in perpetuating the fraud…without their accommodation, the grand scheme of circulating worthless securities to the public would not have materialized,” according to the resolution.

The DOJ also pointed out that Asian Transfer was amiss in performing its duties in monitoring the issuance of Abra Mining shares: “Records show that Asian Transfer has repeatedly confirmed the lodgment of unregistered shares despite overwhelming indication that [Abra Mining] has already exceeded its authorized registered/listed shares. By its omission and acquiescence, Asian Transfer facilitated the fraudulent transactions involving the unregistered shares.”

Prior to the filing of the complaint, the SEC had already imposed fines totaling more than ₱560 million on Abra Mining, its directors, officers, transfer agent and certain stockholders for the unauthorized trading activities.

All officers and directors of AR and its transfer agent, as well as the stockholders, have also been disqualified from being an officer, director, or person performing similar functions of an issuer of registered securities.