In the desire for a level playing field, DAILY TRIBUNE’s Typewriter Fiend gives way to the continuation of the Securities and Exchange Commission’s (SEC) letter in response to the column “SEC’s slip shows” that tackled a planned follow-on offering application:
As an additional safeguard, the prospectus similarly prohibits the issuer, DITO CME Holdings, from freely terminating the FOO by providing that: After the commencement of the Offer Period, the Offer shall not be withdrawn, canceled, suspended or terminated solely by reason of (i) the inability of the Company or the Underwriter to sell or market the Offer Shares or (ii) the refusal or failure by the Company, the Underwriter, or any other entity or person to comply with any undertaking or commitment to take up any shares remaining after the Offer Period.
It is, therefore, perplexing how the writer or the “insider” source could have concluded or formed an opinion that “the underwriting involved an element of deception since the underwriter can always opt out under the terms provided.”
Such a statement was grossly misinformed if not deliberately and intentionally made to malign the Commission, the issuer, and the underwriter. The Commission cannot surmise how the writer — an executive editor of an established news organization — could have forgotten a core principle of journalism, that is, verification.
A quick phone call or short email would have kept DAILY TRIBUNE from publishing patently false and damaging information. The Commission has had a dedicated team handling media queries and concerns since 2019. The email address and telephone number of the SEC Corporate Communication Division have always been available on the Commission’s website and included in our press releases.
The Division could have readily enlightened the writer and DAILY TRIBUNE on the matter. The Commission further notes that registration statements reviewed and considered favorably in the past included similar provisions with regard to the withdrawal of an underwriter’s commitment on limited, specified and clearly defined grounds.
The contested provision in the underwriting agreement between DITO CME Holdings and BDO Capital was not materially different. Thus, the Commission takes exception to the malicious and unfounded insinuations of undue favor given to DITO CME Holdings.
Moreover, the provision governing the underwriting commitment of BDO Capital for the planned FOO of DITO CME Holdings is entirely different from the provision of the 2021 Stock Rights Offering (SRO) of the same company. The Commission takes this opportunity to clarify that the 2021 SRO was an exempt transaction under the SRC because the offer shares were supposed to be offered and distributed to existing shareholders only.
As such, the shares comprising the SRO were not required to be registered and the Commission was not required to review the prospectus for the SRO in the same manner as it would have conducted a full review of an application for the registration of securities intended for public offering. This was expressly noted in the confirmation letter issued by the Commission and on the face of the final prospectus for the aborted SRO.
To be sure, the withdrawal of the 2021 SRO by DITO CME Holdings has prompted the Commission to conduct even more thorough reviews of the prospectuses and underwriting agreements submitted in support of registration statements filed with it. The Commission assures the public that all matters presented for its action undergo thorough study and review by specialists from various departments and offices, as well as by the top management. In deciding the course of action it will take, the Commission is always guided by its mandate of promoting the best interest of the investing public.
Respectfully,
(sgd.) Atty. Emilio B. Aquino, CPA Chairperson and CEO; (sgd.) Atty. Javey Paul D. Francisco, Commissioner; (sgd.) Atty. Karlo S. Bello, Commissioner; and (sgd.) Atty. McJill Bryant T. Fernandez, Commissioner.