Rules Prohibiting Brokers from Dealing on or Otherwise Buying or Selling Securities of Listed Companies Where any of its Stockholders, Directors, Officers or Employees are also Directors or Officers of Such Listed Companies

January 18, 1978 RULES PROHIBITING BROKERS FROM DEALING ON OR OTHERWISE BUYING OR SELLING SECURITIES OF LISTED COMPANIES WHERE ANY OF ITS STOCKHOLDERS, DIRECTORS, OFFICERS OR EMPLOYEES ARE ALSO DIRECTORS OR OFFICERS OF SUCH LISTED COMPANIES WHEREAS, the relationship or close linkage between stockbroker or dealer on the one hand, and officer/director of issuer corporation on the other, may involve possibilities of conflict of interest and obligations, thereby causing erosion of the faith and confidence, if not the interest, of the investing public; WHEREAS, the existence of such relationship or linkage provides access, directly or indirectly, to corporate information such that it can reasonably be foreseen that such linkage can give rise to the inherent unfairness where a partner, officer, director, employee of a stockbroker or dealer, sitting as director or officer of the listed company takes advantage of inside information knowing such information is unavailable to those with whom they will deal; WHEREAS, the promotion of sound and fair trading in securities and the protection of the interest of the investing public are of primary concern to the government; WHEREFORE, in order to attain these objectives and to prevent abuse in the use of inside information, the Securities and Exchange Commission, pursuant to the authority vested in it by the Securities Act and PD No. 902-A, hereby promulgates the following rules: SECTION 1. No broker or dealer operating as an Exchange Member-firm shall deal in or otherwise buy or sell, for its own account or for the account of customers, securities listed on the Exchange issued by any corporation where any stockholder, director, manager, officer, salesman, account executive, floor trader or authorized clerk of said Member-firm is at the time holding office in said issuer corporation as a director, president, vice-president, manager, treasurer, comptroller, secretary or any other office of trust and responsibility. SECTION 2. Every broker or dealer covered by Section 1 hereof having a long position at the time of the effectivity of these rules shall not increase its long position in the security concerned through trading, nor buy and sell further, and shall dispose of the same within a period of two (2) years from the effectivity of these rules; provided, said disposition shall not be in abuse of inside information. Every disposition in pursuance hereof shall be so indicated in the Daily Transaction Report required of every Exchange Member-firm. SECTION 3. Every broker of dealer covered by Section 1 hereof shall submit to the commission initially within ten (10) days from date of effectivity of these rules; and thereafter within ten (10) days after every annual stockholders' meeting of the issuer corporation, an inventory of the long position on the issue concerned held for its own account and for the account of its customers. prcd SECTION 4. Any violation of these rules shall subject the offending broker or dealer to the following penalties: 1st violation 5 trading days suspension of registration plus a fine of not less than P5,000.00 2nd violation 10 trading days suspension of registration plus a fine of not less than P10,000.00 3rd violation 20 trading days suspension of registration plus a fine of not less than P20,000.00 4th violation Revocation of registration and such fine as the Commission may impose. SECTION 5. Any member of an exchange operating through a Member-firm, any stockholder, director, manager, officer, salesman, account executive, floor trader or authorized clerk of said Member-firm who shall be found to have employed another person to act in his stead or as his dummy in the board of management of any company whose shares are listed in the stock exchange thereby allowing the Member-firm to deal on or otherwise buy or sell securities of said company, shall be jointly and severally liable with the brokerage firm under Section 4 hereof in addition to the sanctions provided for under Section 15 of the Securities Act. SECTION 6. The provisions of any rule or regulation in contravention hereof or inconsistent herewith are hereby amended or repealed. SECTION 7. These rules shall be known and cited as SEC Rule BED No. 902-A and shall take effect ten (10) days after its publication in at least two newspapers of general circulation in the Philippines and official notification thereof to the existing stock exchanges. It shall also be published in the Official Gazette. cdll (SGD.) ANGEL L. LIMJOCO, JR. Chairman