Nissan, ex-CEO Ghosn charged in US with hiding $140 mn from investors

WASHINGTON - US securities regulators on Monday charged Japanese automaker Nissan and its former CEO Carlos Ghosn with hiding more than $140 million in Ghosn's expected retirement income from investors.

Ghosn will pay $1 million in fines to settle the matter and will be barred from serving as a corporate executive for 10 years, the Securities and Exchange Commission (SEC) said in a statement. 

Nissan will pay a $15 million fine. 

The SEC also charged ex-board member Greg Kelly with aiding in the fraud. He agreed to a $100,000 fine and a five-year corporate officer ban.

But Ghosn, his former right-hand man Kelly, and Nissan neither admitted nor denied the SEC's allegations.

Attorneys for Ghosn welcomed the deal, saying it allowed him to focus on fighting similar allegations in Japan.

The SEC said Ghosn, 65, working with Kelly and other subordinates, devised ways to disguise large amounts of Ghosn's compensation.

The machinations allegedly stemmed from a shift in Japanese policy in 2009 that required disclosure of individual director compensation above 100 million yen, a little more than $1 million at the time.

"Ghosn became concerned about criticism that might result in the Japanese and French media if his total compensation became publicly known," the SEC said.

Ghosn directed subordinates to lobby the Japanese government to rescind the policy. 

When that failed, "Ghosn and Nissan subordinates took steps to conceal from public disclosure a substantial portion of Ghosn's compensation," the SEC order said.

Ghosn and Kelly allegedly "fraudulently inflated" Ghosn's pension allowance by more than $50 million and created a "false disclosure" to disguise the increase, the SEC said in an order.

Subordinates of Ghosn falsely told the company's chief financial officer that another big set of payments under a long-term incentive plan went to many Nissan employees and not primarily to Ghosn, the order said. 

Ghosn also instructed an employee to change the currency in which Ghosn's pension would be paid.

Under a 2007 compensation agreement, Ghosn was to be paid in yen, but a 2011 clause allowed Ghosn to choose whether to be paid in yen or US dollars, resulting in an increase of about $22 million in retirement payments, the SEC said.

"Investors are entitled to know how, and how much, a company compensates its top executives," said Stephanie Avakian, co-director of enforcement at the SEC. "Ghosn and Kelly went to great lengths to conceal this information from investors and the market."

Ghosn's legal team underscored Monday that the settlement involved no legal finding against him.

GHOSN 'SATISFIED' 

"We are satisfied with the conclusion of this agreement in the United States," said a statement from his attorneys, noting no court had found that Ghosn committed "punishable acts."

"The settlement specifically allows Mr Ghosn to continue to fight the allegations against him in Japan, which Mr Ghosn intends to pursue vigorously," it said, expressing confidence he will eventually be acquitted.

He is awaiting trial on charges of under-reporting millions of dollars in salary and of using company funds for personal expenses. News reports in Japan have said hearings will begin in April.

Following his arrest last November in Japan, Ghosn denied wrongdoing and accused Nissan executives of plotting against him, claiming they opposed his plans to further integrate the firm with France's Renault.

Avakian also said Nissan had misrepresented Ghosn's pension allowance to investors, a move that "advanced Ghosn and Kelly's deceptions and misled investors, including US investors."

The SEC order in the Nissan settlement also cited the car company's "significant cooperation" with US officials and corporate governance changes implemented in the wake of the scandal. 

These included having the board's compensation committee composed entirely of outside directors and making more of the company secretary's decisions subject to audit and internal controls.

"Nissan is firmly committed to continuing to further cultivate robust corporate governance," the company said in a statement.

The settlement came as the Wall Street Journal reported that Nissan's general counsel Ravinder Passi raised doubts on whether an internal probe at Nissan into Ghosn was tainted by conflicts of interests, clouding the carmaker's efforts to move beyond the scandal.

It also comes 2 weeks after Hiroto Saikawa resigned as chief executive amid allegations that he himself padded his salary.

source: news.abs-cbn.com

Rappler challenges SEC decision to revoke license

MANILA - An online news platform critical of Philippine President Rodrigo Duterte on Monday asked the Court of Appeals to set aside the corporate regulator's decision to revoke its license, invoking freedom of the press.

The Securities and Exchange Commission (SEC) has ruled that news website Rappler (www.rappler.com) violated foreign equity restrictions on domestic media because it "sold control to foreigners", a decision Rappler contested.

The SEC said its decision had not become final, allowing Rappler to continue business, pending a court challenge within 15 days.

"The SEC's real purpose in going after Rappler and Rappler Holdings Corporation is to silence them and muzzle freedom of speech," the firm told the court, asking for the ruling to be set aside as the "state has acted with tyranny by putting them out of business".

It added, "Rappler is being made to pay the ultimate price for exercising the freedom of the press."

   
Rappler's lawyer, Francis Lim, said it hoped the case "will ultimately be decided for the interest of the country".

"Our petition raises legal issues that have far-reaching implications on business and press freedom," Lim said, adding the SEC decision "has a chilling effect on business" and could be disastrous to government efforts to attract foreign capital.

The online news platform said no foreigner had exercised control, whether direct or indirect, over it, adding that the SEC had violated its own rules by denying Rappler due process.

Rappler said it was not informed about the decision by a special investigation panel of the regulator and was surprised by the January 11 decision revoking its licence.

SEC head Teresita Herbosa welcomed Rappler's court challenge. "It's their right," she said in a text to Reuters.

A U.N. rapporteur and journalists' groups in the Philippines and abroad have expressed concern over the SEC's decision, calling it an assault on the freedom of the press.

Duterte's spokesman Harry Roque said the issue was distant from questions about press freedom, as Rappler used "deceptive schemes" to raise funds. He also denied any political pressure on the SEC to target the president's critics.

Rappler has repeatedly drawn the ire of Duterte, who called it a "fake news outlet" after it said his closest aide, Bong Go, had intervened in a naval frigate project. (Reporting by Manuel Mogato and Neil Jerome Morales; Editing by Clarence Fernandez)

source: news.abs-cbn.com

Rappler cries harassment over SEC closure order

Online news site Rappler is crying harassment after it was ordered closed by the corporate regulator Securities and Exchange Commission (SEC).

In a decision released by the SEC en banc, it found Rappler Inc., a mass media entity, liable for violating the constitutional and foreign equity restrictions in mass media.


Rappler CEO Maria Ressa, in a press conference, said the SEC ruling did not go through due process.

"They didn't go through due process. The en banc, essentially, issued an order to shut us down without giving us the opportunity to respond to what the special panel found. It wasn't a normal process," she said.

She also believes that the recent decision is the final step in the harassment that journalists are facing under the Duterte administration.

"I guess this is the last part of the kind of harassment that journalists have had in the last year or so. In Rappler, it began a year and a half ago," Ressa said.

"We stand tall. We stand firm. It's good. This is a moment we say we stand for press freedom," she said.

Ressa added that they will fight the decision and bring it to court.

"What we will do is prepare to fight. Our lawyers are preparing our next step."

Presidential spokesperson Harry Roque denied that the administration is harassing the press, and urged Rappler to comply with the law.

"The Constitution sets restrictions on the ownership and management of mass media entities to which all must abide," Roque said.

"The issue at hand is the compliance of 100% Filipino ownership and management of mass media. It is not about infringement on the freedom of the press.

"No one is above the law. Rappler has to comply."

Meanwhile, the Foreign Correspondents Association of the Philippines (FOCAP) and the Movement Against Tyranny (MAT) expressed their support for Rappler.

FOCAP said the SEC decision against Rappler "sends a chilling effect to media organizations in the country."

"Journalists must be able to work independently in an environment free from intimidation and harassment. An assault against journalists is an assault against democracy," the group said in a statement.

MAT, likewise, warned the public that the decision versus Rappler is "a preview of what's in store for media under an openly-fascist Duterte dictatorship."

"Media outlets would be slapped with questionable cases, their registration revoked and accreditation taken back — simply because Duterte and his DDS media network perceive them as critical of the regime," the group said in a Facebook post.

The National Union of Journalists in the Philippines (NUJP) also expressed its support for Rappler.


Meanwhile, both supporters and critics of Rappler took to social media to express their views on the controversy.

While there are some who warned against a possible crackdown on news organizations, some supported the move against Rappler, accusing the news site of espousing "fake news."


Rappler is one of several news organizations that has earned the ire of President Rodrigo Duterte for critical reporting on issues hounding his administration, including the bloody war on drugs.

Late last year, Rappler launched a fund drive asking supporters to help them "stay free and independent of political pressure and commercial interests."

The campaign has collected P1.175 million in nearly 4 months.

source: news.abs-cbn.com

Pizza chain Shakey's files for IPO

MANILA - Restaurant chain Shakey's Pizza Ventures Incorporated (SPAVI) hopes to raise P5.5 billion via an initial public offering (IPO) this year.

SPAVI has filed a prospectus with the Securities and Exchange Commission (SEC) to sell around 352 million primary and secondary shares, including 46 million shares to cater for extra demand, at a maximum price of P15.58 each.

The offer price is expected to be finalized in November before its projected listing in December 2016.

“We intend to use the offer proceeds for the expansion of our in-house commissary, working capital requirements, potential acquisitions, and repayment of debt,” the company said Monday.

SPAVI's in-house commissary supplies the bulk of its pizza dough and crust, which is used to create its trademark Thin Crust pizza.

Shakey's was first established in the United States in 1954. It then opened its first restaurant in 1975. Since then, it has been famous for its Thin Crust pizzas, its chicken and mojos.

SPAVI owns the rights to the Shakey's trademark in the Philippines, where it has 177 stores all over the country. Seven more stores are expected to open before the end of the year, with 20 more stores in the works for 2017.

The company also owns the rights to the Shakey's brand for the Middle East, Asia, China, Australia and Oceania markets.

Majority of SPAVI is owned by Century Pacific Group Incorporated (CPGI), parent company of Century Pacific Food Incorporated (CNPF).

Earlier this year, CPGI and GIC, Singapore's sovereign wealth fund, partnered to acquire majority of the pizza business from the Prieto family, which still holds a minority stake in SPAVI.

source: www.abs-cbnnews.com

One Lightning willing to participate in SEC investigation

MANILA, Philippines - One Lightning Corp. said it is willing to participate in any investigation being conducted by the Securities and Exchange Commission (SEC).

The SEC issued an advisory dated February 27 on One Lighting, saying "as part of its modus operandi, One Lightning Corp., invites people to invest in its cosmetics and healthcare products by promising huge returns."

The SEC further warned that those who participate in this investment-taking activity run the risk of being prosecuted for criminal violation of the Securities Regulation Code.

In its own investigation, One Lightning said it discovered the some of its sales materials may have used "inappropriate" and "confusing" terms during its client presentations.

"OLC learned through its own internal investigation that some speakers or certain sales materials might have used certain terms that were deemed inappropriate and confusing during client presentations. Hence, the issuance of the advisory," the company said.

One Lightning said it is waiting for next move by the SEC.

"OLC consulted its lawyers and, through them, submitted on March 16, 2015 an undertaking manifesting its willingness to participate in any investigation of the SEC. OLC and its legal team shall await procedural steps to be prescribed by The Commission," it said.

One Lightning maintained it is "a legitimate corporation engaged in trading which exclusively sells various health & beauty, beverage products through direct selling."

In a March 9 reported on ANC's On The Money, Atty. Gerard Lukban, commission secretary of the SEC, said One Lightning may be considered a "pyramiding company."

"First of all, it's not sufficient that you're a registered company here in the Philippines. Because you're selling investment contracts to the public, we would need to see your registration statement and a prospectus of what you're offering. This is to protect the potential investors," he told ANC.

"Second, they do not have a licensed salesman to sell these investment contracts. So they already have two violations, so the investment scheme that they are offering, our investigators also noticed, are kind of questionable," he added.

Based on the information from its official website, One Lightning offers different kinds of packages to the public, costing anywhere from P1,500 to P766,500. These packages go with combinations of beauty products and these privileges.

source: www.abs-cbnnews.com

Why SEC issued warning vs One Lightning Corp

MANILA, Philippines - The Securities and Exchange Commission (SEC) has issued an advisory against One Lightning Corp., a company that it said is running a pyramiding operation.

One Lightning is registered as a business that sells 20 different kinds of beauty and personal care products, beverages and supplements.

Based on its registration papers, it started operations on August 22, 2014, and holds offices at the 9th and 10th floors of Strata 100 in Ortigas Center.

It has grown massively in the last seven months, now with more than 50,000 distributors across the country.

"You might say that this is a pyramiding company," Atty. Gerard Lukban, commission secretary of the SEC, said.

The SEC Advisory dated February 27 said "as part of its modus operandi, One Lightning Corp., invites people to invest in its cosmetics and healthcare products by promising huge returns."

It further warned that those who participate in this investment-taking activity run the risk of being prosecuted for criminal violation of the Securities Regulation Code.

"First of all, it's not sufficient that you're a registered company here in the Philippines. Because you're selling investment contracts to the public, we would need to see your registration statement and a prospectus of what you're offering. This is to protect the potential investors," he said.

"Second, they do not have a licensed salesman to sell these investment contracts. So they already have two violations, so the investment scheme that they are offering, our investigators also noticed, are kind of questionable," he added.

Based on the information from its official website, One Lightning offers different kinds of packages to the public, costing anywhere from P1,500 to P766,500. These packages go with combinations of beauty products and these privileges.

However, its members do not earn mainly from the sale of these products, but from three things: one-time referral rewards, which average around 5 percent; maturity bonus, which average around 2 percent of initial pay-in; and profit-sharing.

Profit-sharing, defined by One Lightning, is 30 percent. The company promises to give back the total amount paid, plus 30 percent. That's a guaranteed amount of 130 percent promised to its members.

Although the company does not promise a definite time frame for profit-sharing, its distributors have been receiving them within three months.

No statement from One Lightning

We went to the offices of One Lightning and interviewed president Kenji Ito for hours, but he declined to go on camera. He promised to send a statement instead to air the company's side, but never did.

Instead of sending an official statement, the company sent me a request letter asking for the contents of my report and fair treatment in it.

I requested for a copy of the company's audited financial statement. The company said it will provide figures after the April deadline given by the SEC.

'Too good to be true'

One Lightning's referral rewards and maturity rewards are similar to that of other network marketing companies.

The secret of One Lighting is its "revolutionary compensation plan where the company gives back to its distributors 70 percent of its profits, instead of the 20 percent that most companies do."

The company even shoulders the cost of the products it sells.

Lukban, however, warned the public that they should stay away from promises that are too good to be true.

"The reason why we called it, or we termed it as pyramiding company is because of the structure, wherein those at the top would tend to earn more. Unfortunately, at the end of the day, the pyramid would collapse because you could only recruit so much. Those at the bottom would end up holding nothing. It could be holding a bag without anything in it," he said.

How do you define an investment contract? This corporation is saying it is just selling cosmetics products, not investments.

Investment contract, as defined in the SRC, is a contract wherein you promise or a company promises a payout or a return of so much based on activities or efforts conducted by somebody else.

Like if it's a company, the company would undertake economic activities which would allow it to raise the necessary profits, and at the end of the day would be shared by investors.

Questions to ask before investing

To determine if a networking company is legitimate or a pyramiding company, Lukban recommended asking the following questions:

1. Is there a legitimate product and are they priced reasonably?

2. Where would you get the desired returns? From sales or recruitments?

"If the answer would be mere recruitment, that's another red flag. Because we've seen a lot of companies that have been here for 30-40 years that are engaged in network marketing. These are the legitinmate ones, and one thing is common with them: They do not capitalize on recruitment," Lukban said.

Lukban said those who are offering investments must submit a prospectus to the SEC to illustrate where the money people pay would go, and its projected returns, which would make it clear if it could pay its promised compensation plan to its members.

"Those companies with questionable activities, if they would notice, it's worth noting actually that they wouldn't have an economic activity to speak of. What's the danger to the public if corporations like these are allowed to proliferate," he said.

"The danger with that is it could also be related to money laundering or some illegal activities. I spoke with the distributor, and he said this company has a sister company that provides the cash flow, so that it can give its profit-sharing to its distributors. But that investment is not in the prospectus? It's hidden. So... if you're trying to hide something, the question is why," Lukban added.

Lukban said SEC investigators are going around, looking at questionable practices of similar companies.

He said after a cease-and-desist order, those who are found to continue recruiting are vulnerable to prosecution, even if they're not network leaders or owners.

"They run the risk of being prosecuted, maybe as accessories or accomplices.But if it's proven they're part of a grand conspiracy, under the principle of conspiracy, they could be charged," Lukban said.

This is the strongest language against violators of the Securities Regulation Code that the SEC has ever used. The government regulator intends to crack down hard on corporations that put small investors' money in peril.

So be careful, join only legitimate companies. You may not just lose money, but you could also spend time behind bars.

source: www.abs-cbnnews.com

PSE fined for violating SEC freeze order

MANILA – The Philippine Stock Exchange (PSE) has been fined P100,000 for allegedly violating an order of the Securities and Exchange Commission (SEC) to observe the status quo on listing requirements.

In a disclosure, the PSE said it was notified about the penalty through a letter from the SEC.

PSE said the fine was for the “alleged violation of a standing order of the SEC to observe status quo prior to the implementation of the PSE requirement for applicants for initial public offerings and listings by way of introduction to engage a bank-owned stock transfer agent.”

The stock exchange said it will file a request for reconsideration with the SEC.

source: www.abs-cbnnews.com

Ebola becomes latest stock scam

WASHINGTON/NEW YORK - U.S. regulators warned investors of stock scams tied to West Africa's Ebola outbreak and suspended trading in four small companies that they said have made unverifiable claims about products to prevent or treat the deadly virus.

The Securities and Exchange Commission said on Thursday it had suspended trading in over-the-counter stocks of New York-based Bravo Enterprises Ltd, California-based Immunotech Laboratories Inc and Wholehealth Products Inc, as well as Canada-based Myriad Interactive Media Inc.

The SEC cited a lack of publicly available information about their operations and separately warned that "con artists" may be soliciting investors and claiming to be developing Ebola treatments.

More than 5,400 people have died, most of them in Sierra Leone, Guinea and Liberia, in the worst Ebola outbreak on record.

Immunotech said in an Oct. 21 news release that it hoped to sell an experimental Ebola treatment in Africa. Immunotech trading volume jumped to more than 28 million shares that day, compared with a daily average of just above 223,000 in the previous 50 days. Company officials could not be reached for comment on Thursday.

Myriad Interactive, a website development company, said in an Oct. 15 news release it was designing an "Ebola tracking system" to notify citizens in Western countries about the expanding outbreak.

That day, over 16 million Myriad Interactive shares changed hands, compared with a daily average near 180,000 in the previous 50 days. The company did not return a Reuters call on Thursday.

Unusually high trading volumes have also been seen with Bravo Enterprises and Wholehealth.

Bravo makes dehumidifiers that take moisture from the air and turn it into purified drinking water. An Aug. 27 news release said the equipment can provide "a temporary and permanent alternative water supply for Liberia and countries like it."

May Joan Liu, a manager for Bravo, on Thursday defended the language of the release. "We pointed out that water was a top priority in the Ebola outbreak," she said.

A woman who answered the phone at Wholehealth Products hung up after saying the company, which sells "natural health products," was private.

In 2013, the SEC stepped up its enforcement in microcap fraud, creating a new task force. The agency has periodically issued investor alerts, especially when fraudsters play off of topics featured prominently in the news, such as earthquakes or hurricanes, to pump up thinly traded stocks.

Investor interest in companies that can play a role in curbing the Ebola outbreak has soared in recent months, raising valuations of drugmakers developing vaccines and manufacturers of protective gear.

They include Canadian drugmaker Tekmira Pharmaceuticals Corp , which is working on an experimental treatment under a contract with the U.S. Department of Defense and Ebola vaccine developer NewLink Genetics Corp. Face mask maker Alpha Pro Tech Ltd and protective suit maker Lakeland Industries Inc have also attracted investor interest.

source: www.abs-cbnnews.com

US won't prosecute ex-JPMorgan trader Iksil: source

NEW YORK CITY - The ex-JPMorgan Chase trader nicknamed "the London Whale" for his huge derivatives losses has reached a deal to avoid US prosecution, a source familiar with the situation said Tuesday.

Bruno Iksil, who along with others has been blamed for big bets that resulted in a $6.2 billion loss for the bank in 2012, reached the deal after agreeing to testify in the case, according to the source.

But criminal indictments against two other ex-JPMorgan traders could come later this week in the case, with regulators focused on whether some in the bank sought to cover up the extent of the losses.

Iksil, a French citizen, cooperated with prosectors who determined after reviewing email correspondence and other evidence not to prosecute him, the source told AFP.

Iksil also is not expected to be named in civil charges by the Securities and Exchange Commission and Commodities Futures Trading Commission, the source said.

JPMorgan chief executive Jamie Dimon and other company brass have apologized for the London whale debacle, depicting it as a major blunder that resulted from poor strategy and execution.

But US prosecutors have been probing whether some London officials within JPMorgan understated the losses as they were mounting, misleading senior company officials in New York.

Two other former JPMorgan employees, Julien Grout, who worked under Iksil reporting on the trades, and Javier Martin-Artajo, who was the head of the trading team, have been named in recent days in the US press as facing likely criminal indictment as soon as this week.

All three men worked together at JPMorgan in London.

Indictments against Grout and Martin-Artajo could come as soon as Wednesday, with the timing partly depending on whether they are now in countries where extradition is possible, the Wall Street Journal reported.

Grout, also a French citizen now residing in his home country, has not received a warrant for his arrest, his attorney Edward Little told AFP.

Grout has "no need to collaborate" with US authorities on the probe, Little said. "He's done nothing wrong."

Martin-Artajo, a native of Spain residing in London, is now on a "long planned vacation," his law firm Norton Rose Fulbright said on his behalf.

Martin-Artajo has cooperated with UK regulatory inquiries and has received no communication from "any government regulators" that indicate "he should not be on vacation at this time," said a statement released by the firm.

"Mr. Martin-Artajo is confident that when a complete and fair reconstruction of these complex events is completed, he will be cleared of any wrongdoing," the statement said.

JPMorgan fired Iksil and Martin-Artajo in the aftermath of the whale, while Ina Drew, who led the chief investment office where the ill-conceived trades were launched, also stepped down.

JPMorgan slashed Dimon's 2012 compensation package by 50 percent and overhauled its risk management practices. Still, Dimon had to beat back a shareholder challenge this spring that sought to strip him of his chairmanship at the bank, the nation's largest by revenue.

The SEC has launched a civil probe of the bank's actions, including its disclosures to investors and the bank's internal controls.

The two sides are in talks for a possible settlement this fall, according to reports. The agency is pressing for an admission of wrongdoing in the case, part of new SEC Chairman Mary Jo White's efforts to toughen oversight of misconduct, the reports said.

source: www.abs-cbnnews.com

SEC clears consolidation of Polar Property, Manuela

MANILA - The Securities and Exchange Commission has approved amendments to Polar Property Holdings Corp.’s Articles of Incorporation, paving the way for the consolidation of its resources and operations with retailer Manuela Corp.

In a disclosure to the Philippine Stock Exchange, Polar said the SEC gave the company the green light to increase its authorized capital stock from P5.5 billion divided into 5.5 billion common shares with par value of P1 each, to P17 billion divided into 16.9 billion common shares with par value of P1 per share and 10 billion preferred shares with par value of P0.01 per share.

The preferred shares are voting, cumulative, nonparticipating, non-convertible and non-redeemable.

The regulator also approved the change in Polar's corporate name to Starmalls Inc. The changes in the company's name and stock trading symbol to "STR" will be reflected on the bourse's trading system on July 3.

Polar had said it would issue up to 3.53 billion common shares out of the said capital increase in exchange for all the total outstanding shares of Manuela. Both companies are controlled by the family of Senator Manuel Villar.

The consolidation of the two companies through a share-swap transaction will strengthen the group’s presence in the retailing business as well as in the development of office space for the business process outsourcing industry.

Manuel underwent corporate rehabilitation following the Asian financial crisis in the late 1990s. The Villar family took over management in 2008.

Manuela has a portfolio of five malls with an aggregate gross floor area of 363,000 square meters and 1,777 tenants. It also owns the Worldwide Corporate Center in Mandaluyong City, a Philippine Economic Zone Authority-accredited IT building.

source: interaksyon.com

Wal-Mart may pay millions to resolve Mexican bribery allegations

Wal-Mart is looking into allegations that it engaged in a multiyear bribery campaign in Mexico. It could pay hundreds of millions of dollars in legal expenses and penalties to resolve the allegations.




Wal-Mart Stores Inc. could end up paying hundreds of millions of dollars in legal expenses and penalties to resolve allegations of widespread bribery by officials with its Mexican subsidiary, experts in foreign corruption law said.

The world's largest retailer said it was in the midst of a "worldwide review of our anti-corruption program" and had increased efforts to prevent corruption in Mexico. The Bentonville, Ark., company is looking into allegations that it engaged in a multiyear bribery campaign to build its business.

The allegations come at a time when the Justice Department has been cracking down on foreign corruption. The agency filed some two dozen cases against U.S. companies in 2010, compared with none a decade earlier.

"You have an incredible amount of legal challenges that are going to take part as a result of these failures," said James Post, a business management professor at Boston University. "The board of directors should bring in an outside firm to launch a full investigation. They have to open up the record on everything that's happened here."

He said Wal-Mart also faces shareholder lawsuits, along with criminal charges and potential action by the Securities and Exchange Commission.

Wal-Mart's Mexican subsidiary might have paid $24 million in bribes in order to speed the approval of new stores in Mexico, according to a report from the New York Times. Wal-Mart operates more than 2,000 locations in Mexico, its largest foreign presence.

Investigations of foreign corruption by U.S. companies typically last two to four years and could cost tens of millions of dollars in legal expenses, said Michael Koehler, a Butler University professor.

The bribery allegations "will be used against the company by activists and companies when it attempts to open stores in the U.S. and abroad, and could make it more difficult to attract management talent in international markets," BMO Capital Markets analyst Wayne Hood said.

Wal-Mart shares fell $2.91, or 4.7%, to $59.54 on Monday. Analysts said they fear that the investigation could become a distraction to the company and hamper foreign expansion.

The Foreign Corrupt Practices Act was enacted in 1977 after a series of investigations by the SEC, and hundreds of U.S. companies acknowledged making questionable or illegal payments to foreign government officials and politicians.

Enforcement of the law has become such a concern to business that the U.S. Chamber of Commerce has lobbied for changes. It says that the law is vague and might discourage business.

In Mexico, where Wal-Mart's subsidiary also owns a vast network of supermarkets, family restaurants and clothing stores, the bribery allegations have led to local media coverage and pushed shares down 12% on the Mexican stock market.

Mexican regulators reacted cautiously to the allegations. In Washington for meetings, Finance Secretary Jose Antonio Meade said the government lacked sufficient evidence to move against the firm yet.

Luis Tellez, head of the stock market in Mexico, defended Wal-Mart's performance. He said the retailer has met the market's financial reporting requirements and boosted the Mexican economy by creating jobs.

"Without doubt it has generated wealth in terms of work, wages for its employees and in terms of giving Mexican consumers shopping opportunities at low prices," Tellez said.

The allegations are sure to provide fuel for Wal-Mart detractors south of the border, where the rapid spread of U.S.-style big-box stores threatens traditional, small-time vendors. Critics have also questioned the value of the jobs created by Wal-Mart, saying most of those positions are poorly paid.

Few Mexicans, though, were likely to be shocked at charges that a company had paid bribes.

Mexico has one of the highest corruption indexes among the world's big economies, and greasing the palms of officials is routinely viewed as another cost of doing business by even the most humble street vendor.

source: latimes.com

PSE's CMIC Gets SRO Status

MANILA, Philippines — The Philippine Stock Exchange (PSE) lauded the decision of the Securities and Exchange Commission (SEC) to grant the Capital Markets Integrity Corporation (CMIC) a self regulatory organization status (SRO).

The CMIC was granted a provisional SRO status or the authority to operate as the independent audit, surveillance and compliance unit of the PSE.

The provisional SRO shall be subject to review by the SEC after six months and the full status as SRO may be granted once the SEC is convinced that the CMIC is able to operate pursuant to its mandate.

"This is one of the cornerstone milestones for the equities market in terms of enhancing the corporate governance structure for market regulations. This positive development will also allow the PSE to focus on market and product development," said PSE president Hans B. Sicat.

CMIC president Antonio Garcia Jr. said "the board and management of CMIC are thankful to the SEC for its vote of confidence on CMIC and our commitment to market reforms."

Last year, the CMIC signed an agreement with the Korea Exchange for the acquisition and implementation of a surveillance system which will enhance its capability to monitor stock trading activities and strengthen market integrity.

The said system, called Exture Surveillance System, is targeted to be operational by the first half of 2012.

Integrated into the EXTURE surveillance system are detection rules, statistic analysis models, benchmarks and accounts relation and pattern recognition logics.

The accuracy of these analysis models is crucial for maintaining a fair and orderly market. The new surveillance system also features an Integrated Visual Analysis System (IVAS) tool that can visually illustrate the market at a glance.

Such a function reduces the average analysis and investigation time thereby increasing the efficiency of the whole market surveillance operations.

The new surveillance system is dynamic, efficient, scalable and reliable. At the minimum, the system is designed to support a market of 1 million orders/trades per day.

EXTURE can also adapt to any type of cash (whether equities or fixed-income instruments), derivatives inter-linked markets in the world.

CMIC is the successor company of the PSE's Market Regulation Division which was tasked with trading participant regulation and surveillance. The company is governed by a board composed of its president and CEO and four independent directors.(James A. Loyola)

source: mb.com.ph

SEC official takes witness stand in Corona trial

The prosecution team on Wednesday called to the witness stand an official from the Securities and Exchange Commission (SEC) to testify on the P11-million loan Chief Justice Renato Corona got from his wife’s firm.

Benito Cataran, director of the SEC Company Registration and Monitoring Department, appeared during the 10th day of the Senate impeachment trial to present documents on the Basa-Guidote Enterprises Inc., owned by Corona’s wife, Cristina.

Cataran was supposed to appear as witness on Tuesday, but his testimony was deferred after Senate President Juan Ponce Enrile, who is presiding over the impeachment trial, asked the prosecution to present another witness—Megaworld marketing director Noli Hernandez.

Oriental Mindoro Rep. Reynaldo Umali, one of the public prosecutors, said the prosecution will prove that Corona managed to secure a loan with Basa-Guidote Enterprises in 2003, even after the company’s license was revoked during the same year.

In his 2004 Statement of Assets, Liabilities and Net Worth (SALN), Corona declared a P11-million loan from his wife’s firm. The chief justice continued to declare the loan as his liability until 2009.

Among the accusations against Corona, an appointee of former President Gloria Macapagal-Arroyo, is that he amassed ill-gotten wealth while in the Supreme Court — an accusation Corona has repeatedly denied. — Andreo C. Calonzo/KBK, GMA News

source: gmanetwork.com