SEC issues CDOs vs 2 more companies

The crackdown on the so-called "boiler room" operations and other fraudulent investment schemes being done in the Philippines has intensified as the Securities and Exchange Commission (SEC) issued cease-and-desist orders (CDOs) to two more companies suspected of engaging in such acts.

The latest CDOs were issued against United Capital Management Inc. and GEI Training & Services Center Inc. based on numerous complaints lodged at the SEC by foreign investors, domestics clients and even their own employees.

Unicap, which was registered in March 1999 to sell consumer food products and other commodities in retail and wholesale, was closed down after its clients said they have been defrauded of their investments in foreign securities, although the company was never licensed as broker/dealer in securities.

"As Unicap has not been licensed to engage in the buying or selling of securities and considering the serious nature of the misrepresentation committed and the commission of ‘ultra vires’ act, there is an urgent necessity of restrain or enjoin subject corporation from engaging as broker/dealer in securities in order to safeguard and protect the interest of the investing public in general," the SEC’s Compliance and Enforcement Division director Emilio Aquino said.

In the case of GEI, the complainants allege that it solicits money from prospective clients to be invested in foreign currency trading which, as promised by the company, will yield a profitable return at an average of 30 percent per month.

The complainants further charged that they in fact remitted money to GEI and were asked to infuse additional money whenever their investment would be in a "diminishing situation."

The SEC said GEI has committed a direct violation of the Securities Regulation Code for engaging in the trading of foreign currency futures contracts without the necessary license.

GEI was incorporated in May 2000 primarily to establish training and research centers and secondly, to conduct economic researches and to operate as money changer or exchanging domestic and foreign currencies.

The two firms were the latest in the SEC’s sweeping campaign to curb the illegal market activities of mostly foreign firms that have been using the Philippines as their base for their global investment racketeering. – Conrado Diaz Jr.