Administrator’s decisions of Pacific Exploration and Production Corp will leave his
shareholders without protection by the decisions of the administrators:
Super financier prejudges press release and one declares facilitating the alleged
fraudulent actions of administrators.
On Saturday, 9th of April of this year, the Financial Superintendence of Colombia(henceforth SFC). In a strange act was published a press release in which in
general terms he apologizes for the fulfillment of his legal obligations and leaves
exposed thousands of shareholders of Pacific Exploration and Production Corp.
(formerly Pacific Rubiales). Also, besides prejudging, for in a press release it seems
to be deciding on steps that to the date they are dealing to the interior of the
entity in front of Pacific Exploration and Production Corp- (henceforth Pacific). The
title traded on the stock exchange- the entity seems to be “oiling the market” so
that an adverse decision to the interests of the shareholders of Pacific is taken on
impunity. The previous thing constitutes a set of disciplinary lacks which it can have
a set of consequences of legal type. As mentioned above in the following
paragraphs, as representatives of a very wide percentage of shareholders, we
demonstrate the inconsistencies and vagueness with which the SFC apologizes for
the compliance of their legal duties interpreting the law in favor of the
administrators of the company and not in favor of the interests of his shareholders.
First, says the SFC, that:
1. Foreign entities can register their securities in the RNVE, to make a public bid
in Colombia, or so that their securities be traded in a local business system.
In the case of the Pacific, the actions required to negotiate in the secondary
market were registered, in order that the investors can buy and sell shares
that already were registered and issued in Canada. These operations does


not capture public resources in the local market by the issuer, the primary
emission was already done within the terms and conditions of the Canadian
regulation previously. The negotiations done in the local market can be
done only by investors.
Unfortunately, the SFC ignores their obligations, especially the ones established in
the Decree 2555 of 2010 and the norms modify it, as well as the original ones
established in the 964 law of 2006.In effect, it is false that the capture of resources
on local market done by the issuer does not exist. The Superintendence cannot
excuse itself to practice its legal functions in reason to the emission of the original
title when there is full certainty that the transactions associated to the title has
been done in Colombia, and the company, although incorporated in Canada,
and being done the primary emission in the aforementioned country, traces in the
public market of securities of Colombia, and because of this only fact, the issuer is
submitted to the rules of the public market of Colombian value, independently
that the transaction of the local market be done by investors.
Precisely the Article 1 of the Law 964 OF 2006 considers that the major function of
the SFC intervention in the securities market is “to protector the rights of the
investors” and the following function, the SFC wants to make it seen in a strange
way, it is no tied nor exempted, not by the Constitution, nor by the Law of the
place of the title emission.
Now, it is more strange that the SFC affirms that there isn´t “capture in the local
market” when all operations concerning the title is done through of the bank BCV
(for its initials in Spanish) and through authorized agents like the intermediaries of
the market securities.


If an Colombian investor, professional or not, acquires at least tan action through
the securities market of Colombia, or through an intermediary of the securities
market of Colombia, that operation is covered to the Colombian legal regime and
is a capture operation that occurs in the Colombian market. To affirm the opposite
is to lend a level of immunity definitely illegal to the issuers of titles abroad,
stimulating fraud and the illegal capture of funds and exhibiting to the Colombian
securities market and to the Colombians to damaging operations that can be
designed with ends of fraud. In this case, there is wordiness of the laxity of the SFC
opposite to the protection of the investors rights to those unprofessional investors
who come to the Colombian stock market and they acquire a title issued abroad,
listed in Colombia that, according to the demonstrated for the SFC, he does not
deserve any protection.
2. To the issuers of securities abroad it results applicable, among others,
associative regime of corporate, tributary and exchange government of the
country domicile and they are submitted to the judicial and administrative
authorities of the jurisdiction of origin with Independence to where they
develop their social object or where their securities are registered. In the
case of Pacific, the company is submitted to the administrative and social
regulation of that jurisdiction.
It is indisputable that to the issuers of securities domiciled abroad they turns out to
be applicable the association regime, of Corporate governance, tributary and
exchange government of the country of his domicile, regardless of the place
where they realize his operations, What turns out to be false is that it is considered
that a company domiciled abroad should end for this condition, unaffected to the
supervision and control of the national authorities that for the effect the Constitution
and the Law have entrusted the protection of the investors who come to the public
market securities.


In effect, if a Colombian or foreign person decides to invest in a foreign company,
clearly his investment is submitted to the legal regime of the country where the
company is national in the one that he invested; but it is not admissible that the
person who does the above mentioned investment using intermediaries of the
public market of securities of Colombia, end submitted to coming to foreign
authorities to obtain protection on investments that were done on the Colombian
Therefore, we remind the SFC what was arranged in the literal b.6 in the Article 1 of
Law 964 of 2005, in which one of the criteria‟s that must be taken into
consideration in the exercise of intervention in the securities market is “precedence
to the economic and finance sense, when determining if some right of
authorization or register and in general when norms focused on the protection of
the investors expires”. In the same way, it is the authority‟s function that “the
securities market is provided of exact and complete information”
It is not too late to remind the Supervisor that within Law 964 of 2005 are “activities
of the securities market a) the emission and offer of securities and i) the supply of
information to the market securities, including the collection and processing of the
same”. In the same manner according to the Law “only the entities constituted or
being constituted in Colombia can exercise activities of the market securities”
“except the one in literal a) and i) cases in which it is not necessary to constitute a
society in the country this include the ones who does emission and offer of
securities, and therefore, like it is indicated in paragraph 1 of article 3 of the
mentioned Law, “ the entities that exercise any of the activities mentioned in the
present Article will be put under State observation. In any of the norms the SFC has
been excused of having intervention in the operations and offers of the
companies incorporated abroad”


It results even stranger that now SFC pretends its surveillance and control functions
have no jurisdiction to issuers incorporated overseas, especially over functions
aimed at „‟disclosure of information that must be supplied to the Superintendence
[Financial], to the public, investors or shareholders, as well as those aimed at
preserving trade secrets and information of a similar nature ... ". Additionally, it
should be noted that under Article 4 of Law 964 of 2005, the authority must "instruct
entities subject to inspection and ongoing supervision or control on how the
provisions governing their activity must be met in the publicly traded market, set
the technical and legal criteria that facilitate compliance with such standards and
outline the procedures for its full implementation" as well as "Preemptively suspend
when there are well-founded fear that harm to investors or market may be
caused, a public offering in any of its forms; the negotiation of certain value, the
registration of securities, or issuers in the National Registry of Securities and Issuers ...
The SFC should not forget that in the exercise of their functions, in accordance with
Law 964 of 2005, can "impose the precautionary measures set out in the Code of
Civil Procedure and other preventive measures set out in this law and the rules that
develop it, supplement or amend it aimed at safeguarding securities, financial
instruments, managed resources and, in general, assets in the possession of
persons under investigation, when there are reasons that can reasonably be
inferred that those assets are at risk and may be affected the interest of investors. "
It is worrying that the SFC stops again to interpret the rules in favor of those who, in
accordance with the regulation, are the object of protection: investors.
Third. SFC says:
4. The registration of foreign issuers in Colombia covers the negotiation of
securities in the market but does not change the applicable regime to the
issuer. The benefit obtain to the local investor is the one allow to be used
by Colombian intermediaries and that relations is ruled locally, the
advisory must be done by a local agent, all operations in local currency


through the Colombian exchange and using the official language of our
country. The latter are significant advantages to whoever decides to
negotiate securities from a foreign issuer in the local market, always
remaining the possibilities to negotiate its securities directly on the original
market following the intermediation rules of that country.
SFC is not wrong in asserting that registration of foreign issuers in the public market
of Colombia expands markets trading, but errs in stating that does not change the
regime applicable to the issuer, because if anything is clear from the above cited
rules -Articles 1, 3 and 6 of Law 964 of 2005-, is that authority must regulate the
registration and supervision of such securities in the Colombian public market
Colombian and the issuer must report any change in the situation. This not only
protects investors, but allows intermediaries of public securities market properly
fulfill their advisory duties for local operations made locally in the official language.
Fourth. SFC also states that:
5. Considering the above the reach of the supervisory functions on an
foreign issuer are principally focused in watching the local market has
and adequate disclosure of information to the investors looking at the
behavior of the foreign market as a reference such as the case of Canada
for the issuer Pacific.
According to the SFC the main function of this entity is no other than what the
local market has adequate revelation of information to investors taking as
reference the market behavior. And in their functions with regard to the revelation
of the SFC information is not wrong, although it is clear from what was said above,
that is not its only function. But if it were, the entity must be clear about what
information is „‟adequate” and, noticing the breach of these duties under the
exercise of this function, it can use all possible mechanisms to ensure that investors
and intermediaries in the public market are informed moreover when the press


reveals information that must be public, such as, for example, the intension of
remunerating managers in exchange for the cancellation of shares of existing
In conclusion, it cannot be acceptable for domestic and foreign investors that the
regulator of Colombian public market considers that securities listed and traded
on the public market are excluded from the monitoring, surveillance and control of
the entity to the detriment of the rights of investors. It is a continuous concern, to
say the least, that the authority, through a simple press release, excuses it selves to
intervene in a situation that will leave thousands of investors and creditors in the
domestic market, subject to the decisions of a body administrators with
questionable tools and strategies are putting their interests above the interests of
shareholders, avoiding at all costs to inform the market about its actions and using
as an instrument the silence and darkness of the night of a Sunday to make
decisions that will end with the interests of shareholders.
In this way, we will continue working on the defense of the shareholders whom we
represent and we hope that the SFC resolve the actions presented in accordance
with the principles of protecting investors governing its action and the provisions in
the regulations Colombian.