Article: No closure yet for BW scandal

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No closure yet for BW scandal

Raul J. Palabrica , 25 May 2021

Finally, after more than two decades, a trial court has rendered a decision on a scandal that almost caused the collapse of the Philippine stock market in 1999.

The court found Johnny Yap, then president of Solar Securities Inc., a stockbroker, guilty of stock manipulation of the shares of BW Resources Corp., a listed gaming company, and sentenced him to 14 years in prison and to pay a fine of P1 million.

The evidence presented showed that Yap engaged in the sale and purchase of BW stocks 142 times through parties with common owners.

That scheme, which the law describes as a “wash sale” and prohibits, resulted in the phenomenal rise of the per share price of BW stocks from P0.80 to P12.50 within the period of June and October 1999.

Incidentally, the people behind BW were known to be in the good graces of then President Joseph Estrada.

The trading frenzy reached a point that several stockbrokers traded BW stocks over and beyond their capital, which was in violation of the securities laws. Had the scandal run its full course and those stockbrokers defaulted on their trades, the stock market would have been toast that year.

The stockbrokers and their clients who were in the know on the manipulation earned millions of pesos in profits and brokers’ fees, but, in the process, hundreds of “less smart” investors, which included high government officials and lawmakers, later found themselves holding worthless BW shares.

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