SEC issues CDO against BOSS network

MANILA, Philippines — The Securities and Exchange Commission (SEC), the corporate regulator, has raised a red flag on another fraudulent investment scheme, this time by a company called the Building Our Success Stories Network or BOSS Network.

The SEC warned that BOSS Network is similar to a Ponzi scheme.

In an order issued on June 18, the SEC directed BOSS Network to immediately cease and desist, under pain of contempt, from further engaging in the sale and offering for sale of securities until it has secured from the regulator the necessary requirements and permit to sell.

The SEC issued the order after finding BOSS Network to have solicited investments from the public under a scheme promoted in social networking sites as a multi-level marketing program for personal care products.

BOSS Network’s scheme involves packages ranging from P1,500 to P382,500, which include two perfume bottles and two bars of whitening soap for the starting kits, while the top-tier bundle comprises 510 units for each product.

Member-investors also earn points from buying the packages and from recruiting people.

The SEC ruled that the scheme constitutes the sale and offer of securities in the form of investment contracts, whereby a person invests money in a common enterprise and is led to expect profits primarily from the efforts of others.

It also said that the business model partakes of the nature of a Ponzi scheme, an investment fraud where the purported returns to existing investors are sourced from the contribution of new investors.

It cited the corporation’s capitalization amounting to P1.5 million while promising member-investors guaranteed monthly returns ranging from 50 to 87 percent of the amount invested.

“Clearly, BOSS Network’s business model and capitalization cannot sustain the promised returns on investment, especially if no new investors will come in,” the SEC said.

This, the SEC said, means that payouts for investors are financed from investments of new recruits.

“This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public,” the SEC said.

“It is clear that BOSS Network is soliciting investments from the public in the guise of operating a multi-level marketing business, with a promise of guaranteed high return of investment,” the SEC said.

Upon investigation, the SEC said BOSS Network does not have the proper license to solicit investments from the public.

Section 8 of Republic Act 8799, or The Securities Regulation Code, provides that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC.

BOSS Network registered as a corporation in March 2018 primarily “to engage in direct selling of goods and merchandise to consumers.”

But the SEC said its certificate of incorporation explicitly provided that “the corporation shall not solicit, accept or take investments/ placements from the public neither shall it issue investment contracts.”