SEC-Davao warns public against fraudulent investment schemes amid COVID-19

DAVAO CITY (MindaNews / 20 May) – The Securities and Exchange Commission (SEC)-Davao Extension Office has warned investors here to protect themselves from investment companies that are taking advantage of the coronavirus disease (COVID-19) pandemic to solicit and accept investments from the public online under the so-called “digital marketing business” schemes.

The Securities and Exchange Commission (SEC)-Davao Extension Office. Photo courtesy of Google Street View

“Because of the pandemic, the Commission is anticipating financially difficult times ahead. The SEC-Davao Extension Office is reminding the public to protect your hard-earned money so you may have some for future use,” the SEC-Davao said in its advisory.

The agency advised the public to rely on official sources of information before making investments, encouraging them to visit its website to check on legitimacy of these companies, and keep themselves updated on suspicious entities that were recently added in its advisories.

The central office of SEC issued a cease and desist order (CDO) against CROWD1 Asia Pacific Inc., which claims to operate globally, for “soliciting and accepting investments from the public under a scheme disguised as a digital marketing business.”

In its order dated May 12, the agency said it has ordered the CROWD1 to “cease their internet presence relating to the transactions and investment scheme,” and would institute “appropriate administrative and criminal action against any persons or entities found to act as solicitors, information providers, salesmen, agents, brokers, dealers, or for and in behalf of the subject partnership.”

The agency warned the public that it would be unsustainable to invest in companies that do not have a legal personality.

The Commission said the Securities Regulations Code provides that only registered companies could solicit securities and other similar investment instruments after securing a “secondary license,” explaining that a certificate of incorporation does not constitute a license to solicit or accept investments from the public.

“The Commission finds that the foregoing investment scheme involves the sale and/or offer of securities in the form of investment contracts which require secondary license under the SRC,” it said.

The SEC-Davao said it has also received several complaints from other areas within its jurisdiction, many of them coming from Davao Region, Soccsksargen, and Northern Mindanao.

In its decision, the SEC’s Enforcement and Investor Protection Department established that “CROWD1 is selling and/or offering securities to the public in the form of investment contracts without the required secondary license from the Commission.”

It added that CROWD1’s business model claims to be a “digital marketing business which generates income from online games, and allegedly facilitates the generation by its members of residual income from its affiliate gaming companies such as AFFIGLO and MIGGSTER which developed DOTA, Mobile Legends, Flappybird and Candy Crush.”

It said CROWD1 in reality is “carrying out a fraudulent investment scheme consisting of the sale and/or offer of inexistent securities in the form of investment contracts to the public using the internet and online platforms.”

It said CROWD1 actively promotes and entices the public to invest in it by choosing from among the packages available which guarantees a return of investment, and paying the corresponding price for the same to wit: (a) white package worth ₱6,000; (b) black package worth ₱18,000; (c) gold package worth ₱47,000; and (d) titanium package worth ₱150,000. There is also this Pro-titanium package worth ₱240,000, which is allegedly limited in number.

“CROWD1 also represented to the public that a pairing incentive/benefit payable in Euro is available to member-investors who are able to recruit new members.

After choosing and purchasing a package, the member-investor is made to believe that he/she will start to earn five different bonuses: streamline bonus, binary pairing bonus, fear of loss bonus, matching bonus, and residual bonus from games and gambling apps,” it said. (Antonio L. Colina IV / MindaNews)