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24 - SEC v. PRICE RICHARDSON

The Supreme Court found probable cause to indict Price Richardson Corporation for securities violations but not its officers Velarde-Albert and Resnick. To indict officers for a corporation's criminal acts, there must be evidence that the officers actively participated in or had the power to prevent the wrongdoing. The affidavit from a former employee alleged Price Richardson engaged in illegal "boiler room" stock sales tactics under changing company names. However, there was no showing Velarde-Albert and Resnick were responsible for the corporation's unlawful acts, as a corporation's identity is separate from its officers.

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Jerone Karl Grospe Bustamante
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490 views1 page

24 - SEC v. PRICE RICHARDSON

The Supreme Court found probable cause to indict Price Richardson Corporation for securities violations but not its officers Velarde-Albert and Resnick. To indict officers for a corporation's criminal acts, there must be evidence that the officers actively participated in or had the power to prevent the wrongdoing. The affidavit from a former employee alleged Price Richardson engaged in illegal "boiler room" stock sales tactics under changing company names. However, there was no showing Velarde-Albert and Resnick were responsible for the corporation's unlawful acts, as a corporation's identity is separate from its officers.

Uploaded by

Jerone Karl Grospe Bustamante
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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To be held criminally liable for the acts of a corporation, there must be a showing that its

officers, directors, and shareholders actively participated in or had the power to prevent
the wrongful act
SECURITIES AND EXCHANGE COMMISSION v. PRICE RICHARDSON CORPORATION,
CONSUELO VELARDE-ALBERT, and GORDON RESNICK
G.R. No. 197032, 26 July 2017
Leonen, J.

FACTS:
Michelle Avelino, a former employee of Price Richardson, executed a sworn affidavit at NBI,
alleging that Price Richardson Corporation was engaged in boiler room operations, wherein the
company sells non-existent stocks to investors using high pressure sales tactics. Whenever this
activity was discovered, the company would close and emerge under a new company name.

The SEC filed its complaint against Price Richardson and its officers, for violation of Article 315
of the RPC, and the Securities Regulation Code (SRC). The SEC alleged that Price Richardson
was neither licensed nor registered to engage in the business of buying and selling securities
within the country, or act as salesman or an associated person of any broker or dealer. Velarde-
Albert and Resnick are being held liable for acting as brokers despite not being registered to do
so.

ISSUE:
Whether probable cause exists to indict respondents for violation of the RPC and the SRC

HELD:
YES. Sufficient probable cause exists to form a belief that Price Richardson probably committed
a crime. However, Velarde-Albert and Resnick cannot be indicted. There was no showing that
they were responsible for the corporation’s acts. A corporation’s personality is separate and
distinct from its officers, directors, and shareholders. To be held criminally liable for the acts of a
corporation, there must be a showing that the officers, directors, or shareholders actively
participated in or a had the power to prevent the wrongful act.

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