SEC Upholds Fines vs NOW over Disclosure Violation

Why It Matters

The ruling reinforces rigorous disclosure standards, signaling heightened enforcement risk for Philippine listed companies and their executives.

Key Takeaways

• SEC upholds PHP1M fines for NOW and Velarde
• Disclosure deemed half‑truth, misleading investors about liability
• Board members may face personal liability investigations
• SEC rejects sub‑judice defense as semantic evasion
• Misleading statement traded for over a month

Pulse Analysis

The SEC’s decisive action against NOW Corp. highlights a broader shift toward stricter enforcement of corporate transparency in the Philippines. By emphasizing substance over form, the regulator is sending a clear message that half‑truths and material omissions will no longer be tolerated, even if the underlying facts are technically accurate. This approach aligns the Philippines with global best practices, where regulators prioritize investor protection and market integrity over procedural technicalities.

For corporate officers, the decision sets a precedent that personal accountability extends beyond the company’s legal entity. Section 24.1(d) of the Securities Regulation Code holds executives directly liable for misleading disclosures, meaning that board members must scrutinize every public statement for potential ambiguity. The SEC’s directive to probe other directors underscores a ripple effect: companies may now implement more robust internal review processes, engage legal counsel early, and adopt stricter disclosure checklists to mitigate personal exposure.

Market participants are also likely to adjust their risk assessments. Investors, aware that misleading information can remain in circulation for weeks, may demand higher transparency standards and incorporate regulatory compliance metrics into valuation models. The ruling could spur a wave of corrective filings and heightened vigilance across the Philippine Stock Exchange, fostering a more reliable information environment that benefits both issuers and shareholders.

SEC upholds fines vs NOW over disclosure violation

By Emmanuel John B. Abris (@inquirerdotnet) · Philippine Daily Inquirer · 02:07 AM February 10, 2026

MANILA, Philippines — The Securities and Exchange Commission (SEC) en banc has rejected the appeal of NOW Corp. and its chair Mel Velarde. The regulator affirmed P1 million in fines each for violating securities law over what the SEC found to be a misleading market disclosure.

In a 23‑page decision promulgated on Dec. 16, 2025, the Commission said the appeal was “bereft of merit.” It upheld two earlier orders issued by its Enforcement and Investor Protection Department (EIPD). The SEC ordered NOW and Velarde to pay the penalties for breaching disclosure rules under the Securities Regulation Code (SRC).

The Commission also directed the EIPD to investigate the potential liability of other members of NOW’s board of directors “to determine if they could be held accountable in their personal capacities.” The SEC said that the sanctions were without prejudice to any subsequent findings of liability against them.

The case stemmed from a November 2021 disclosure that NOW issued after an ABS‑CBN news report said the government, through the National Telecommunications Commission (NTC), was seeking resolution of NOW Telecom’s alleged P2.6‑billion unpaid fees.

In response to a query from the Philippine Stock Exchange, NOW said it was not a party to the Supreme Court case and claimed it had “no knowledge of the specific details” of the alleged motion. It invoked the sub judice rule.

The SEC rejected this defense, calling it “a semantic evasion.” It ruled that the disclosure was “untenable and completely misleading.”

‘Delusive’ statement

While the statement may have been literally true in a narrow sense, the Commission said it was nonetheless “delusive and calculated to be misunderstood,” since investors were concerned about the alleged P2.6‑billion liability.

“Certainly, the public was not concerned with the procedural filing of the NTC Motion; but was concerned with the alleged PHP 2.6 billion liability,” the SEC said.

The regulator added that the disclosure duties under the SRC are “not a mere checklist.” It emphasized that substance, not form, is paramount, describing the filing as “a classic material omission” and “a textbook example of a half‑truth.”

The Commission also held Velarde personally liable. It said corporate officers have a statutory responsibility under Section 24.1(d) of the SRC when they make or cause misleading disclosures.

“When Mr. Velarde, acting for NOW Corp., made or caused the making of a misleading statement, he personally violated Section 24.1(d) of the SRC,” the SEC ruled.

The SEC noted that misleading information was traded in the market for over a month, and violations are not cured by later corrections.