SEC warns public against dubious investment firms

The Securities and Exchange Commission (SEC) warned the public yesterday against dubious companies soliciting investments, saying that investors should first ensure that these operators have the proper registrations.

SEC Chairman Lilia R. Bautista said the SEC could easily pursue cases against such operators under the provisions of the Securities Regulation Act as well as the country’s anti-fraud laws.

According to Bautista, there may not be specific laws that address every peculiarity in these operations, but they could be easily prosecuted for non-registration of securities as well as fraud, all of which carry serious penalties and possible jail terms.

The warning came on the heels of a complaint against a certain Five Vision Consultancy, which was reported to be accepting money placements from investors at 10-percent monthly interest.

According to the SEC, the Securities Regulation Act is strict on the registration of securities in any form before these are allowed for sale to the public.

Even more spurious, the commission said, are companies that accept money placements with monthly interest, especially if the company is not actually a bank or any duly authorized financial institution that had the mandate to perform banking or quasi-banking functions.

The SEC said it was already investigating the case of Five Visions Consultancy to determine whether it had the necessary permits to conduct the business it was engaged in.

The complaint received by the commission indicated that Five Vision was supposedly allowed to invest its money abroad. The complainant reported that the company was engaged in currency trading in London, using the money pooled from investments it solicited in the Philippines.

The SEC said the only entities allowed to perform such functions were mutual fund companies that pool investments from individual investors and then invest the fund in various activities with a guaranteed dividend or interest.

However, mutual funds were in effect selling shares in their companies to individual retail investors and these shares were meticulously registered and qualified by the commission to make sure that the company was not a dubious operator with doubtful investments.

Government has started to crack down on dubious investment operations in the country after the Philippines was branded by the Paris-based Financial Action Task Force (FATF) among countries known as havens for money-laundering.

Following the enactment of the SRA, the government enacted the Anti-Money Laundering Act which dramatically expanded the government’s authority to investigate and even intervene in various transactions deemed as suspicious.

These operations include pyramiding, boileroom operations and various solicitation activities that involve the sale of unregistered securities.

The commission said these cases could easily be pursued under the country’s anti-fraud laws as well as the provision for non-registration of securities under the SRA.