The Securities and Exchange Commission, or SEC, has affirmed its decision to impose a P1 million penalty each on NOW Corp. and its Chief Executive Officer, Mel Velarde, for “misleading” disclosures about the P2.6-billion unpaid obligation to the government of the telecoms business.
The SEC’s Enforcement and Investor Protection Department’s denial of NOW Corp. and Velarde’s request for reconsideration was confirmed on 16 February due to a lack of merit, which means the fine imposition remains.
The case originated from the public disclosure made by Now Corp. and Velarde in November 2021, where they asserted having no awareness of the specifics surrounding the motion submitted by the National Telecommunications Commission, or NTC, to the Supreme Court.
The motion sought a resolution concerning NOW Telecom's unpaid supervision and regulation fees, or SRF, and spectrum user fees, or SUF, worth P2.6 billion.
NOW Telecom, the primary business of NOW Corp., is a mobile telecommunications service license holder in the country.
In July last year, NOW Corp. contested the SEC order issued on 15 June 2023, through a request for reconsideration.
The SEC order then found NOW Corp. and its owner administratively liable for violating Section 24.1(d) about Section 54.1 of the Securities Regulation Code, or SRC.
The alleged violation involves the failure to disclose material information to the public.
In its latest order, the SEC maintained that NOW Corp. and Velarde “cannot simply deny that they were unaware of the details surrounding the Motion filed by the NTC.”
“To be simply dismissive about it and to nonchalantly disclose that ‘The company has no knowledge of the specific details surrounding the alleged Motion field by the [NTC]...’ created a misconception to the investing public,” the SEC held.
“In this connection, it is clear that there was a concomitant failure on the part of NOW Corp. and Mr. Velarde to make full, accurate, and timely disclosure of a material fact or information about securities as mandated compliance to a listed company constitutes a violation of Section 24.1 (d) of the Securities Regulation Code,” the regulator added.
The SEC rejected the argument of the Now Corp. and Velarde that disclosing the information related to the NTC motion would contravene the sub judice rule by dismissing it as "unavailing."
“What is required of NOW to disclose is ‘relevant information not reported in the news article’ which encompasses ‘financial results and other information which is material to the investor's decision.’ Hence, we do not find any application of the sub judice rule in this particular case.”
As of press time, neither Now Corp. nor Velarde had responded to requests from this reporter for comment and clarification.