SEC reiterates warning vs pyramiding schemes
The Securities and Exchange Commission has reiterated its warning to the public regarding the dangers of investing in companies or entities engaged in solicitation of investments or in operations that involve the Ponzi scheme.
A Ponzi scheme is a type of investment fraud wherein an entity promises high financial returns that are not expected from traditional investments. Instead of investing the victim’s funds, the entity pays the original investors with the money given by subsequent investors. Usually, enough money is returned to the original few investors to make them believe that profits are actually realized. These original few investors then are expected to recruit new investors, with their testimonials that they have indeed received their profits.
To determine whether an entity uses the Ponzi scheme, an interested investor should notice if the entity offers or guarantees a huge profit in a very short period of time; if it uses a binary network commonly referred to as upline or downline; earn commissions, if it enforces a provision for a lock-up period; and uses high pressure methods to convince investors to reinvest their earnings.
An investor should also be alarmed when the entity holds informal trainings and orientation seminars and has no principal office, address, and directors.
A certificate of registration issued by the Department of Trade and Industry and/or the SEC does not automatically allow an entity to solicit investments. A secondary license authorizing the entity to sell investments should be secured from the SEC.
Entities identified as engaged in illegal investment activities in Baguio City and other nearby towns include Golden Bio Marketing, Camcast Corporation, FJ General Merchandise, FX8M International Club Inc./FX8M International Inc., ADS Success/1ADS Success, NABA Training, Orro Plata Manna, and Tessline.
These investment schemes ordinarily collapse as fast as they are created while leaving its investors behind and unable to recoup their investments.
Securities are shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character. The essential trait of a security is that it is a participation in a profit-making venture with an investment of money in a common enterprise with an expectation of profits primarily from the efforts of others.
The public is urged to report any offer of investment made by person or entities using similar modus operandi to the SEC for appropriate enforcement actions. – SEC Baguio release