An SEC official said First Quadrant has filed a new business plan to address the concerns raised by the Commission and the Department of Trade and Industry.
The DTI earlier asked First Quadrant to remove from its business plan the earning options which are found to be pyramiding in nature.
First Quadrant is owned by the family of businesswoman Rhodora Tactacan-Tumpilan, a sister-in-law of Department of Environment and Natural Resources Secretary Mike Defensor.
"We’re reviewing what they submitted to us. We hope to make a decision in the next few days," the SEC official said.
The company markets high quality and reasonably priced footwear, ready-to-wear garments, bags, belts, wallets, health products, and fashion accessories.
First Quadrant also came under fire from the SEC for unauthorized sale of securities to the public.
An investigation conducted by the SEC showed that bulk of the company’s revenues came from the recruitment of members and not from the sale of products.
The SEC said the investment contracts being issued by the company to its members should be registered since these falls under the definition of securities." Sec. 8.1 of the Securities Regulation Code prohibits the sale of securities without prior registration with the commission.
In 2002, the SEC was swamped with queries about the legality of the operations of First Quadrant. The commission then referred the case to the DTI, the agency tasked to look into pyramiding schemes.
A pyramid scheme is defined under the Consumer Act as a sales device or business scheme where participants invest in the right or chance to get compensation or gifts based on the introduction of more participants in the program.
First Quadrant charges an initial investment fee of P8,880 per member. Investors get a percentage or commission from the sales of the products and through the sales of the people recruited as distributors.
Among the benefits that could be availed by members include a P3,000 shopping money for products sold by establishments accredited with First Quadrant; 50 percent lifetime discounts on the products sold by the same establishments; free accident insurance with a face value of P50,000 (amount is doubled if the accident happens abroad) from Prudential Life; and brochures or literature kit about the company.