The Securities and Exchange Commission (SEC) has notched a major regulatory victory after the Department of Justice (DoJ) indicted Abra Mining & Industrial Corporation (AR), its directors, officers, transfer agent, and several stockholders for the illegal trading of unregistered shares that rocked the Philippine stock market from 2015 to 2019.

In a resolution issued 12 August, state prosecutors found prima facie evidence to charge AR for multiple violations of the Securities Regulation Code (SRC) and the Revised Corporation Code, including fraudulent trading schemes that defrauded investors and undermined confidence in the Philippine Stock Exchange (PSE).

Among those charged were AR officers James Beloy, Amelia Beloy, Premy Ann Beloy and Joel Albert Beloy, along with Asian Transfer & Registry Corporation, and stockholders Joseph Acuesta, Andrei Vincent Freight Services Corp., Jubileum Air and Sea Logistics Inc., Ferdinand Collado, Leila Collado and Susan May Gacelo.

The SEC, which uncovered the fraud, earlier slapped more than P560 million in fines and disqualified AR’s directors, officers, and transfer agent from serving in any listed company. The regulator discovered that AR had issued and traded shares far beyond those registered with the SEC and authorized for listing in the PSE, with the excess securities sold to the public through the Philippine Depositary and Trust Corp. (PDTC).

The watchdog’s investigation revealed that as of February 2021, PDTC records showed a massive 258.96 billion AR shares lodged, compared to only 95 million registered and 72.95 billion authorized for listing — an excess described by the DoJ as part of a “scheme designed to defraud or deceive the public into investing in worthless securities.”

“It can be gathered from (AR’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 DoJ resolution stated.

The fraudulent issuances allegedly involved collusion between AR, its transfer agent, and stockholders who transacted unregistered shares — some issued below par value and not fully paid — before circulating them in the market as if they were legitimate.

The DoJ emphasized that Asian Transfer facilitated the fraud by repeatedly confirming the lodgment of unregistered shares despite clear signs that AR had already breached its authorized cap.

For investors, the case underscores the risks of weak compliance and fraudulent schemes in the equities market. This indictment could serve as a turning point for market discipline, with regulators cracking down on corporate governance failures that erode investor trust.

“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.

“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.”