A financial dispute has escalated for NOW Corp., as the Securities and Exchange Commission (SEC) firmly rejected their appeal of a substantial fine. The SEC En Banc upheld a P1-million penalty levied against the company for a disclosure deemed misleading to investors.
The core of the issue traces back to a 2021 filing made by NOW Corp. following reports of a significant financial claim against its affiliate, NOW Telecom Co., Inc. The National Telecommunications Commission (NTC) was reportedly pursuing a resolution regarding P2.6 billion in unpaid fees.
NOW Corp. initially attempted to distance itself from the matter, stating it wasn’t a party to a related Supreme Court case and citing the principle of *sub judice* – meaning the case was still under consideration and public discussion could prejudice the outcome. They claimed limited knowledge of the specifics of the NTC’s motion.
However, the SEC wasn’t convinced. Regulators determined that while technically accurate in a narrow sense, NOW Corp.’s disclosure was ultimately “delusive” and likely to be misinterpreted by the public. The SEC believed investors were primarily concerned with the potential P2.6 billion liability, not the procedural details of the NTC’s filing.
The SEC En Banc found the company’s appeal “bereft of merit,” reinforcing earlier rulings from its Enforcement and Investor Protection Department (EIPD). Both NOW Corp. and its chairman, Mel V. Velarde, are now required to pay the P1-million fines.
This isn’t the end of the legal battle. NOW Corp. has announced its intention to challenge the SEC’s decision further, appealing to the Court of Appeals. The company maintains that the ruling will not impact its financial standing or ongoing business operations.
Beyond the immediate fine, the SEC has also directed the EIPD to investigate the potential liability of other board directors. The commission is exploring whether individual directors could be held personally accountable for the misleading disclosure.
The SEC’s stance underscores the critical importance of transparent and comprehensive disclosures to investors. Even seemingly accurate statements can be problematic if they obscure crucial information or create a misleading impression of a company’s financial health and potential liabilities.
