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    Sec vs. Ca

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    Rio Tolentino
    The SEC found both Cualoping Securities Corporation, a stockbroker, and Fidelity Stock Transfers, Inc., a stock transfer agent for Philex Mining Corp., to be negligent after stolen Philex stock certificates ended up being traded through Cualoping. While both were negligent, neither was found to have committed fraud warranting fines under the Revised Securities Act. However, Fidelity was found to have violated an SEC memorandum by failing to promptly notify Cualoping and the clearing house that the certificates had been stolen, so the fine imposed on Fidelity by the SEC was reinstated.

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    Sec vs. Ca

    Uploaded by

    Rio Tolentino
    73 views2 pages
    The SEC found both Cualoping Securities Corporation, a stockbroker, and Fidelity Stock Transfers, Inc., a stock transfer agent for Philex Mining Corp., to be negligent after stolen Philex stock certificates ended up being traded through Cualoping. While both were negligent, neither was found to have committed fraud warranting fines under the Revised Securities Act. However, Fidelity was found to have violated an SEC memorandum by failing to promptly notify Cualoping and the clearing house that the certificates had been stolen, so the fine imposed on Fidelity by the SEC was reinstated.

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    sec vs. ca

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    The SEC found both Cualoping Securities Corporation, a stockbroker, and Fidelity Stock Transfers, Inc., a stock transfer agent for Philex Mining Corp., to be negligent after stolen Philex stock certificates ended up being traded through Cualoping. While both were negligent, neither was found to have committed fraud warranting fines under the Revised Securities Act. However, Fidelity was found to have violated an SEC memorandum by failing to promptly notify Cualoping and the clearing house that the certificates had been stolen, so the fine imposed on Fidelity by the SEC was reinstated.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    73 views2 pages

    Sec vs. Ca

    Uploaded by

    Rio Tolentino
    The SEC found both Cualoping Securities Corporation, a stockbroker, and Fidelity Stock Transfers, Inc., a stock transfer agent for Philex Mining Corp., to be negligent after stolen Philex stock certificates ended up being traded through Cualoping. While both were negligent, neither was found to have committed fraud warranting fines under the Revised Securities Act. However, Fidelity was found to have violated an SEC memorandum by failing to promptly notify Cualoping and the clearing house that the certificates had been stolen, so the fine imposed on Fidelity by the SEC was reinstated.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    G.R. Nos.

    106425 & 106431-32 July 21, 1995


    SECURITIES AND EXCHANGE COMMISSION, petitioner,
    vs.
    THE HONORABLE COURT OF APPEALS, CUALOPING SECURITIES CORPORATION AND FIDELITY STOCK
    TRANSFERS, INC.
    VITUG, J.

    FALLO:

    FACTS:

    Cualoping is a stockbroker, on the other hand, Fidelity is the stock transfer agent of Philex Mining Corp.
    The certificates of stock of Philex were stolen from the premises of Fidelity which consist of stock
    dividends of certain Philex shareholders.

    Later, the stolen stock certificates ended in the hands of a certain Agustin Lopez, a  messenger of New
    World Security Inc., an entirely different stock brokerage firm. Agustin Lopez brought the stolen stock
    certificates to CUALOPING for trading and sale with the stock exchange. After the stock exchange
    awarded and confirmed the sale of the stocks represented by said certificates to different buyers, the
    same were delivered to FIDELITY for the cancellation of the stock certificates and for issuance of new
    certificates in the name of the new buyers. FIDELITY rejected the issuance of new certificates in favor of
    the buyers for reasons that the signatures of the owners of the certificates were allegedly forged and
    thus the cancellation and new issuance thereof cannot be affected. Fidelity then sought the opinion on
    the matter from SEC which summoned Fidelity and Cualoping to a conference.

    The SEC found both Cualoping and Fidelity equally negligent in the performance of their duties hereby
    orders them to (1) jointly replace the subject shares and for Fidelity to cause the transfer thereof in the
    names of the buyers and (2) to pay a fine of P50,000,00 each for having violated Section 29 (a) of the
    Revised Securities Act.

    ISSUE/S:

    Whether Cualoping and Fidelity are both negligent in this case.

    RULING:

    The Revised Securities Act (Batas Pambansa Blg. 178) is designed, in main, to protect public investors
    from fraudulent schemes by regulating the sale and disposition of securities, creating, for this purpose, a
    Securities and Exchange Commission to ensure proper compliance with the law. Here, the SEC has aptly
    invoked the provisions of Section 29, in relation to Section 46, of the Revised Securities Act.

    No question that both FIDELITY and CUALOPING have been guilty of negligence in the conduct of their
    affairs involving the questioned certificates of stock. To constitute, however, a violation of the Revised
    Securities Act that can warrant an imposition of a fine under Section 29(3), in relation to Section 46 of
    the Act, fraud or deceit, not mere negligence, on the part of the offender must be established. Given the
    factual circumstances found by the appellate court, neither FIDELITY nor CUALOPING, albeit indeed
    remiss in the observance of due diligence, can be held liable under the above provisions of the Revised
    Securities Act.
    However, violation by FIDELITY of SEC-BED Memorandum Circular No. 9, series of 1987, which reads: To
    expedite the release of Certificates of Securities to the buyers, the Commission reiterates the following
    rules in delivery of stock certificates:

    1. Deadlines for Delivery of Documents — All requirements must be complied with the certificates of
    stock, as well as necessary documents required for the transfer of shares shall be delivered within the
    following periods:

    xxx xxx xxx

    d. From transfer agent back to clearing house and/or broker — not longer than ten (10) days from
    receipt of documents provided there is a "good delivery," where there is no "good delivery," the
    certificate and the accompanying documents shall be returned to the clearing house or broker not later
    than two (2) days after receipt thereof.

    FIDELITY is candid enough to admit that it has truly failed to promptly notify CUALOPING and the
    clearing house of the pilferage of the certificates of stock.

    WHEREFORE, the decision of the Court of Appeals is AFFIRMED except the portion thereof which sets
    aside the imposition by the Securities and Exchange Commission of a fine on FIDELITY which is hereby
    REINSTATED. No costs.

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