Friday, February 10, 2006

Securities with The La Vida Lawyer

One of the subjects I took-up when I was still in Junior Year was Securities. My professor then was Atty. Aceron of the La Vida Lawyer Blog. He actually introduced me to the world of blogging. Our subject with him even has its securities where we interact.

One of the interesting interactions we had that earned us an open book exam is reposted here:

The Question

Having studied Philippine Securities Law, what do you think are the legal issues that need to be addressed when foreign securities are issued and traded in the Philipines?

My Answer

Sir, I think the following are the legal issues that need to be addressed if we allow foreign securities to be issued and traded in the Philippines. I have also bravely included herein possible solutions and recommendations to resolve such issues:
1. The relationship between our sovereignty and the global market.
This basically involves the question of who has jurisdiction over cases involving securities fraud and insider trading and manipulations. The ability to enforce our law within our own borders has always been the concept of our very own sovereignty, and such power in securities cases is vested in our regulatory agencies such as SEC and the law enforcement authorities. Foreign issuers, however also has their own securities law that governs/regulates their issuances in foreign markets.
Therefore, conflict as to governing law as well as jurisdiction over such cases shall arise.
Possible Solutions:
Cooperation between our laws and the foreign laws. – The very essence of securities law is the protection of investors and the public, therefore, foreign securities regulators must cooperate with our local authorities in order to harmonize both securities laws.This can be best exemplified in a case decided by the Supreme Court of Canada on the question of a Canadian national doing unregistered transactions in the United States securities market.
In the case of British Columbia Securities Commission vs. Global Securities Corp, a Canadian broker-dealer suspected of soliciting US investors while not being registered with the US SEC challenged the subpoena issued by the British Columbia Securities Commission (BCSC), who acted upon US SEC’s request, arguing that assistance of BCSC to US SEC violated Canada’s Constitution by making the BCSC an enforcer of a foreign government’s law. The Supreme Court of Canada rejected this argument and held that the British Columbia Securities Act permitting information-sharing was constitutional because the “pith and substance of the provision in question is the enforcement of British Columbia’s securities law.” The Court continued, “The statute’s dominant purpose is the enforcement of domestic securities law, both by obtaining reciprocal assistance from foreign regulators, and by discovering foreign securities law violations by domestic registrants.
I believe that if US and Canada reciprocated for the mutual protection of investors, then our country can also do that to foreign securities issuers.
2. The lack of relevant securities laws applicable to foreign security issuers.
While our Securities and Regulations Code are basically patterned from foreign securities code (particularly the US SRC), I find it ironic that there are no specific laws or provisions therein regulating the entry of foreign securities issuers. Rule 144A (Regulation S) of the US SRC makes it clear that both foreign and domestic issuers were encouraged to raise capital in the United States. Regulation S provides detailed guidelines to companies offering securities offshore on how to structure these offerings so that they will be deemed to take place solely outside the United States. Such provisions however are absent in our own Securities Regulation Code.
Possible Solutions:
Since our country’s participation in the international capital markets is inevitable, our legislature must pass laws applicable not only to the entry of foreign security issuers but also our entry to other foreign securities markets.
Sir, since we are confined on the issue of legality, I think that those are the primary issues that must be addressed. However, I believe that with our present political climate, accepting issuers of foreign securities in our local market will be detrimental to our economy because I strongly believe that manipulators and insiders shall utilize this vehicle for their personal gains.


  1. Your link to securities law is really helpful because of the scarce materials on the subject.

  2. a piece of unsolicited advice:
    in the bar exam, do not answer in the first person as in "I believe" or "I think" but rather present sentences in third person.
    bar exam is not all about substance, presentation counts.

  3. andrea,

    i keep telling those taking securites in my school to check the site for reference since Atty. Aceron is no longer teaching in Araullo. Its really a nice site.

    lawstude's friend

    thnx for the advice.