Investors in delisted firm Calata Corp. are one step closer to securing what is due to them after a Makati court upheld the conviction of its top officers for market manipulation tied to exaggerated claims about a casino project that caused a surge in its stock trading in 2016.

Citing a consolidated order dated 19 May, the Securities and Exchange Commission said over the weekend that the Makati Regional Trial Court Branch 148 denied the motion for reconsideration filed by Calata chairman and CEO Joseph H. Calata and corporate secretary Jose Marie Fabella.

The officers had sought to overturn their conviction on two counts of violating Section 24(d) of the Securities Regulation Code (SRC), which prohibits false or misleading statements aimed at inducing the public to buy securities.

In a 31 May 2024 decision, the court ordered both executives to pay fines of P4 million each or serve prison time if unable to pay due to insolvency.

“The fact that (Calata and Fabella) may have also committed an administrative violation of Section 17 of the SRC is not a bar to prosecution under Section 24 of the [SRC],” the court ruled. It stressed that the existence of administrative violations does not prevent the filing of criminal charges.

The court also rejected the officers’ claim that no public harm or investor losses were proven, saying: “Actual loss or harm, much less actual public harm, is not an element of the offense. Thus, the Court reiterates that the evidence presented by the prosecution proves beyond a reasonable doubt the criminal liability of the accused.”

The case stemmed from a 2016 disclosure by Calata Corp. to the Philippine Stock Exchange, claiming it had partnered with Sino-America Gaming and Macau Resources Group Ltd. to develop the P55.74-billion Mactan Leisure City integrated resort and casino project, which was expected to begin operations in 2020.

The announcement triggered a 2,455 percent surge in trading volume on August 23, 2016, followed by a 196.41 percent spike the next day.

The court later ruled the disclosures contained “unfounded promises and exaggerations,” including the omission of key facts — such as the absence of a license application with the Philippine Amusement and Gaming Corp.

A follow-up disclosure on 26 August 2016, intended to clarify the partnership agreements, was also deemed misleading for not stating whether a permit application had been filed with PAGCOR.