In its notice, the SEC said the public should take the necessary precautions before entering into any transactions with NELFWA since the company is not authorized to grant loans.
The advisory was issued by the SEC following reports that the company has allegedly been extending loans and soliciting funds from the public.
The SEC earlier formed a committee to look into the operations of nearly 400 financing companies on concerns that some of these firms are engaged in fraudulent activities.
The commission has expressed concern over the growing operations of non-bank lending institutions in the country following reports that a number of financing and lending companies have gone beyond their primary purpose.
The SEC has continuously received reports that several lending and financing firms have been soliciting funds from the public, in violation of their primary purpose which is to grant loans.
The watchdog agency said while it recognized the role of microfinance, it could not tolerate the dangers posed by thousands of unregulated lending investors who derive their funding requirements from the investing public.
The SEC admitted that it is helpless in regulating the activities of the close to 400 finance companies and about 7,000 lending corporations in the country.
In view of this, the commission has reiterated its warning to the public against placing their money in financing and lending companies that promise high investment returns.
A bill seeking to regulate the establishment and operations of lending companies is pending before Congress. The bill was filed in 2002 as part of efforts to protect the public against deceptive schemes and fly-by-night lending operators.
While there are special laws, such as the Financing Company Act, that govern most non-bank financial companies, there is no specific law that covers lending firms.
The bill will lay down the minimum requirements and standards for the creation of lending firms.
The proposed measure gives the Department of Trade and Industry the authority to supervise the operations of lending companies.
Under the bill, corporations will be required to register as a corporation and mandated to file with the DTI a schedule of liabilities, identifying debtors and indicating the maturity pattern of transactions as well as other reports that the DTI may require. These reports shall be signed under oath by the company’s principal executive officer and principal financial officer.