1. REPORTED BY: DENNIS V. VENTILACION JR. The Securities Regulation Code ( Republic Act 8799)

2. Outline of Presentation I. Titles and Definitions II. Securities and Exchange Commission III. Registration of Securities IV. Regulation of Pre-Need Plans V. Reportorial Requirements VI. Prohibitions on Fraud, Manipulation, and Insider Trading VII. Regulation of Securities Market Professional VIII. Acquisition and Transfer of Securities and Settlement of Transactions in Securities IX. Margin and Credit

3. Titles and Definitions

4. Declaration of State Policy “The State shall establish a socially conscious, free market that regulates itself, encourage the widest participation of ownership in enterprises, enhance the democratization of wealth, promote the development of the capital market, protect investors, ensure full and fair disclosure about securities, minimize if not totally eliminate insider trading and other fraudulent or manipulative devices and practices which create distortions in the free market.” Hence forth, the Securities Regulation Code is enacted.

5. Definition of Terms Securities Shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character. a) Shares of stock, bonds, debentures, notes, evidences of indebtedness, asset-backed securities; b) Investment contracts, certificates of interest or participation in a profit sharing agreement, certificates of deposit for a future subscription; c) Fractional undivided interests in oil, gas or other mineral rights; d) Derivatives like option and warrants; e) Certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar instruments; f) Proprietary or non proprietary membership certificates in corporations; and g) Other instruments as may in the future be determined by the Commission.

6. Definition of Terms  Issuer — Originator or creator of the security.  Broker — Person engage in business of buying and selling securities for the accounts of others.  Dealer — Person engage in business of buying and selling securities for his/her own account.  Associated person of a broker or dealer — An employee who directly exercises control of supervisory authority.

7. Definition of Terms  Clearing Agency — Any person who acts as intermediary, upon payment, in securities transaction.  Exchange — An organized marketplace or facility where buyers and sellers trade securities and commodities.  Prospectus — A document made by or on behalf of an issuer, underwriter or dealer to sell or offer securities for sale to the public through a registration statement filed with the Commission  Promoter — A person who funds or organize the business or enterprise of the issuer and receives consideration therefore.

8. Definition of Terms  Registration Statement — Application for the registration of securities required by the SEC.  Salesman — Employed by the dealer, issuer, or broker to buy and sell securities but has no directly supervisory authority.  Uncertificated Security — A security evidenced by electronic or similar records.  Underwriter — A person who firmly guarantees the distribution and sales of securities by another company.

9. Definition of Terms  Insider — Any person or entity who possess or has access to information about the issuer or the security that is not generally available to the public.  Pre-Need Plans — are contracts which provide for the performance of future services or the payment of future monetary considerations at the time of actual need that are approved by the SEC.

10. Securities and Exchange Commission

11. Administrative Agency The Commission will be composed five Commissioners of which one will be the Chairperson, appointed by the President for a term of seven years. Any Commissioner appointed to fill a vacancy prior to the expiration of the term for his/her predecessor shall serve only for the unexpired portion of such term. The Commissioners must be natural-born citizen of the Philippines, at least 40 years of age for the Chairperson and at least 35 years of age for the Commissioners. Possesses good moral character, unquestionable integrity, known probity and patriotism, with recognized competence in social and economic disciplines.

12. Administrative Agency Majority of the Commissioners, including the Chairperson shall be members of the Philippine Bar. The Commission shall hold meetings at least once a week, as often upon the call of the Chairperson, or upon the request of three Commissioners. The presence of three Commissioners constitute quorum. In the absence of the Chairperson, the most senior Commissioner shall be the presiding officer.

13. Powers and Function 1. Have jurisdiction and supervision over all corporations, partnerships or associations who are the grantees of primary franchises and/or a license or permit issued by the Government; 2. Formulate policies and recommendations on issues concerning the securities market, advise Congress and other government agencies on all aspects of the securities market and propose legislation and amendments thereto; 3. Approve, reject, suspend, revoke or require amendments to registration statements, and registration and licensing applications; 4. Regulate, investigate or supervise the activities of persons to ensure compliance; 5. Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies and other SROs;

14. Powers and Functions 6. Impose sanctions for the violation of laws and the rules, regulations and orders issued pursuant thereto; 7. Prepare, approve, amend or repeal rules, regulations and orders, and issue opinions and provide guidance on and supervise compliance with such rules, regulations and orders; 8. Enlist the aid and support of and/or deputize any and all enforcement agencies of the Government, civil or military as well as any private institution, corporation, firm, association or person in the implementation of its powers and functions under this Code; 9. Issue cease and desist orders to prevent fraud or injury to the investing public;

15. 10. Punish for contempt of the Commission, both direct and indirect, in accordance with the pertinent provisions of and penalties prescribed by the Rules of Court; 11. Compel the officers of any registered corporation or association to call meetings of stockholders or members thereof under its supervision; 12. Issue subpoena duces tecum and summon witnesses to appear in any proceedings of the Commission and in appropriate cases, order the examination, search and seizure of all documents, papers, files and records, tax returns, and books of accounts of any entity or person under investigation as may be necessary for the proper disposition of the cases before it, subject to the provisions of existing laws;

16. 13. Suspend, or revoke, after proper notice and hearing the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law; and 14. Exercise such other powers as may be provided by law as well as those which may be implied from, or which are necessary or incidental to the carrying out of, the express powers granted the Commission to achieve the objectives and purposes of these laws.

17. Registration of Securities

18. Registration Securities shall not be sold, offered for sale, or distributed within the Philippines without a registration statement duly filed with and approved by the Commission. The Commission may conditionally approve the registration statement under terms it may deem necessary. Certain securities and transactions may be exempted from registration if it falls under the criteria set by or based on the transgression of the Commission.

19. Regulation of Pre-Need Plans

20. Pre-Need Plans shall not be sold or offered to the public except in accordance with the rules and regulations which the Commission shall prescribe. Such rules shall regulate the sale of Pre-Need Plans by: requiring the registration of pre-need plans licensing persons involved in the sale of pre-need plans requiring disclosures to prospective plan holders prescribing advertising guidelines providing for uniform accounting system reports and record keeping with respect to such plans imposing capital bonding and other financial responsibility establishing trust funds for the payment of benefits under such plans

21. Reportorial Requirements

22. Reportorial Requirement Within 135 days after the end of the issuer’s fiscal year or prescribed by the Commission, an annual report shall include:  balance sheet  profit and loss statement and statement of cash flows for such last fiscal year (certified by an independent certified public accountant)  a management discussion and analysis of results of operations Interim fiscal periods and current report on significant developments of the issuer may be required by the Commission to monitor the operations and fiscal conditions of the issuer.

23. Prohibitions on Fraud, Manipulation, and Insider Trading

24. Manipulation of Security Prices; Devices and Practices It is unlawful for any person, acting for himself or other, directly or indirectly: To create false or misleading appearance of active trade in any listed security in an Exchange or any other market:  By effecting any transaction in such security which involves no change in the beneficial ownership.  By participating in the sale or purchase of such security with the insider knowledge of other involved parties.  By performing similar acts where there is no change in beneficial ownership

25. Manipulation of Security Prices; Devices and Practices To effect a series of transactions in securities:  Raises their price to induce the purchase of a security.  Depresses their price to induce the sale of a security.  Create active trading to induce such a purchase or sale through manipulative devices. To circulate information that the price of any security listed in an Exchange will or is likely to rise or fall because of manipulative market operations.

26. Manipulation of Security Prices; Devices and Practices To make false or misleading statements with respect to any material fact to induce the purchase or sale of any security. To effect any series of transactions for the purchase or sale of any security for the purpose of pegging, fixing or stabilizing the price of such security unless otherwise allowed by this Code or by the rules of the Commission. “Pegging is the act of buying a security in large quantity close to the expiry date. This is done to encourage a favorable move in the market.”

27. Manipulation of Security Prices; Devices and Practices Regulation of Option Trading -no member of an Exchange shall directly or indirectly endorse or guarantee the performance of any security registered on a securities exchange. Fraudulent Transactions -it is unlawful for any person, directly or indirectly, in connect with the purchase or sell of securities to: o Employ any device, scheme, or artifice to defraud. o Obtain money or property by mean of any untrue statements of a material fact. o Engage in any act of business which would be deceitful to any person.

28. Manipulation of Security Prices; Devices and Practices Insider’s Duty to Disclose When Trading -it shall be unlawful for an insider to sell or buy a security of the issuer while in possession of material information with respect to the issuer or the security that is not generally available to the public. -it shall be unlawful for an insider to disclose “insider information” to other parties. Is Insider Trading illegal? Insider trading can be legal if the trading occurs on the basis of information which is available to the public.

29. Regulation of Securities Market Professionals

30. Registration of Brokers, Dealers, Salesmen, and Associated Persons No person shall engage in the business of buying and selling of securities in the Philippines as a broker or dealer, act as a salesman, or an associated person of any dealer or broker unless registered with the Commission. No issuer or registered broker or dealer shall employ any salesman or associated person who is not registered with the Commission. The Commission may waive the two mentioned about as it deems consistent with the public interest and protection of investors.

31. Qualifications a) Pass a written examination on proficiency and knowledge in the area of activity which registration is sought. b) For brokers or dealers, a minimum net capital is prescribe by the Commission and provide a bond or other securities as the Commission may prescribe to secure compliance with this Code. c) If not a natural born citizen of the Philippines, the applicant files a written consent to service of process to the Commission.

32. Revocations, Refusal, or Suspension Registrations that fail to meet the necessary qualifications and requirements for registration set by this Code may be refused by the Commission Any registered dealer, broker, salesman, or associated person, who violate any provision of this Code or any other law administered by the Commission, may be revoked, suspended, or limitations placed by the Commission after due notice and hearing.

33. Acquisition and Transfer of Securities and Settlement of Transactions in Securities

34. Prohibition on Use of Unregistered Clearing Agency It shall be unlawful for any broker, dealer, salesman, associated person of a broker or dealer, or clearing agency, directly or indirectly, to make use of any facility of a clearing agency in the Philippines unless registered.

35. Registration of Clearing Agencies Documents required:  An undertaking to comply and enforce compliance by its participants with the provisions of this Code, and any amendment thereto, and the clearing agency’s rules.  The organizational charts of the Exchange, its rules of procedure, and a list of its officers and participants.  Copies of the clearing agency’s rules.

36. Registration of Clearing Agencies Rules of the Clearing Agency must include:  The expulsion, suspension, or disciplining of a participant for violation of this Code.  A fair procedure for:  Disciplining of participants  Denial of participation rights to any person seeking to be a participant  The prohibition or limitation of access to services offered by the clearing agency  Equitable allocation of reasonable dues, fees, and other charges among participants.

37. Registration of Clearing Agencies  Prevention of fraudulent and manipulative acts and practices, promotion of just and equitable principles of trade  Transparent, prompt, and accurate clearance and settlement of transactions in securities handle by the clearing agency.  Establishment and oversight of a fund to guarantee the prompt and accurate clearance and settlement of transactions executed on an exchange.

38. Margin and Credit

39. Margin Requirements To prevent excessive use of credit for the purchase of securities, the Commission, in accordance with the credit and monetary policies that may be promulgated from time to time by the Monetary Board of the Bangko Sentral ng Pilipinas. “Credit is the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future”

40. Margin Requirements For credit, standard rules and regulations: An amount not greater than whichever is higher of a) 65% of the current market price of the security, or b) 100% of the lowest market price of the security during the preceding 36 calendar months, but not more than 75% of the current market price.

41. References www.sec.gov.ph

42. …SO MAINSTREAM GAME

43. QUESTION 1 __________________________________ is the national government regulatory agency charged with supervision over the corporate sector, the capital market participants, the securities and investment instruments market, and the investing public. Created on October 26, 1936 by the Commonwealth Act (CA) 83 also known as The Securities Act, it was tasked to regulate the sale and registration of securities, exchanges, brokers, dealers and salesmen. Subsequent laws were enacted to encourage investments and more active public participation in the affairs of private corporations and enterprises to broaden the agency's mandates, powers and functions; and in recent years, to give greater focus on the Commission's role in capital market development, fostering good governance and enhancing investor protection. The Securities and Exchange Commission (SEC)

44. QUESTION 2 A government employee is aware that a new regulation is going to be passed that will significantly benefit an electricity company. The government employee buys shares of the electricity company and then pushes for the regulation to go through. Is this ILLEGAL INSIDER TRADING or LEGAL INSIDER TRADING ?

45. QUESTION 3 What event is on February 13, 2016 (Saturday), from 9AM to 12NN at Br. Andrew Gonzales Hall Room 1103 ??? PRE-TRIP ORIENTATION!!!