Photographer: Julian Abram Wainwright/Bloomberg

Facebook Is Next Frontier in Philippines’ Insider Trading Battle

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The Philippines will start formally monitoring social networks like Facebook Inc. and Twitter Inc. as the nation’s securities regulator cracks down on stock-market manipulation and Ponzi schemes.

The Securities & Exchange Commission is collecting evidence to prepare a case against one company for insider trading, Commissioner Ephyro Luis Amatong, 42, said in a May 18 interview, without naming the firm. The regulator will monitor tweets and Facebook chat groups for signs of price manipulation and is “actively pursuing” other cases, he said, declining to say whether they are primarily investigating company insiders or brokers.

“The pump-and-dump, insider trading, scams: we are told they’re happening online,” Amatong said. “We’re actively pursuing cases, to protect the integrity of the market.”

The value of the Philippine stock market has grown threefold to $278 billion in the past five years as the country’s fastest economic growth since the 1950s lures foreign funds and retail investors. While the benchmark equity index has soared more than 140 percent in that period, surging share prices are not always accompanied by disclosure of information, and there have been cases of financial results being divulged to analysts before they appeared on the bourse’s website.

Facebook and Twitter didn’t respond to e-mails from Bloomberg seeking comment on insider-trading investigations. Amatong didn’t specify whether either social network had been used for wrongful activities.

“There’s a lot of chatter online on what stocks to buy and you wonder sometimes: how did these people get this information?” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila.

High-Frequency Trading

Filipinos are tied with Argentinians as the world’s biggest users of social media, according to a report this year from London-based consultancy We Are Social. Use is so prevalent that finance officials said in 2010 they were turning to Facebook and Twitter to track down tax cheats.

The Philippine campaign echoes similar moves in China, where the securities regulator last month started a campaign to crack down on market manipulation by brokerage employees using non-public information, as an equities boom lures a record number of novice investors who risk being left out in the cold by sudden, unexplained stock-price movements.

Shares of Manila Broadcasting Co. surged 20-fold to 80 pesos in the 12 trading sessions through May 14 without any disclosure of information to the exchange. The company told the bourse it wasn’t aware of a reason for the price movement. Rudolph Jularlbal, vice president and legal and corporate secretary, didn’t respond to an e-mail or messages left at his office on Tuesday by Bloomberg.

Early Release

“It’s very unusual that the company by this time still doesn’t have anything to disclose on what’s moving its shares,” Astro del Castillo, managing director at First Grade Holdings Inc., said on May 7 after Manila Broadcasting stock had jumped 50 percent for a seventh straight day.

Globe Telecom Inc. filed its first-quarter results to the exchange and the SEC right after its May 12 board meeting, said Froilan Castelo, the company’s general counsel. Some analysts and media, including Bloomberg, received a copy of the report before the exchange uploaded it onto its website the following day.

The SEC in November 2012 filed a complaint against owners of Calata Corp., alleging they engaged in high-frequency, high-volume buy-and-sell transactions to boost the price before an initial public offering. Calata denied any wrongdoing.

A month before that, Chairwoman Teresita Herbosa said the SEC was probing six cases of stock-price manipulation and three of insider-trading.

“Stronger surveillance will send a signal to the market that the SEC is serious on curbing price manipulation,” Ravelas said.

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