Businessman Joseph Calata found guilty of misleading investors on Cebu casino project
MANILA, Philippines – A Makati regional trial court has found businessman Joseph Calata and another senior executive of Calata Corporation guilty of violating the Securities Regulation Code over making exaggerated statements about a casino project in Cebu, effectively misleading investors to buy shares in 2016.
In a decision issued on May 28, Makati City Regional Trial Court Branch 148 found Calata, the chairman, president, and chief executive officer of Calata Corporation, and Jose Marie Fabella guilty beyond reasonable doubt of two counts of violating Republic Act No. 8799 or the Securities Regulation Code.
Fabella is the company’s corporate secretary, compliance officer, and corporate information officer.
Calata and Fabella were sentenced to pay P4 million in fines each, or, in the event that they are unable to pay the fines due to insolvency, to serve jail time.
The case against Calata’s supposed business partner, Michael Foxman, the CEO of Sino-America Gaming Investment Group LLC, was archived since he remains at large.
The case against Calata and others stemmed from a disclosure made in August 23, 2016, where the trading volume of the company’s shares suddenly surged by 2,455% after they told investors that they were developing a $1.4-billion integrated resort and casino called Mactan Leisure City. Trading volume surged further by 196.4% the next trading day.
Calata claimed that Mactan Leisure City will start operations in 2020 and was “poised to become a game changer in the region’s family leisure tourism and gaming offering,” with an estimated gross annual revenue of P55.74 billion.
The SEC said that “the August 23, 2016 disclosure contained unfounded promises and exaggerations” and that adding that such statements “are not clearly referred to as mere forecasts and are couched and exaggerated to such extent that the public may be misled in thinking that the project would start its operations in 2020, generate a certain amount of revenue, and entail job opportunities.”
In fact, Calata never made an application for a gaming license with the Philippine Amusement and Gaming Corporation.
Prior to this decision, eight shareholders of Calata Corporation were indicted for engaging in trading activities that artificially inflated the price of the company’s shares.
The PSE on November 7, 2017, ordered the delisting of Calata Corporation from its official registry for multiple violations of disclosure rules. It also ordered Calata to conduct a tender offer to minority shareholders of the company. – Rappler.com