SEC warns public: Avoid Ponzi, pyramid investment scams

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State-owned corporate regulator Securities and Exchange Commission (SEC) renewed its public warning against Ponzi and pyramid investment schemes that appear to be proliferating in the country.

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In a notice posted on its website, the SEC said the commission is “alarmed” about the investment scams that were being used by some fraudulent companies or organizations such as Emgoldex Philippines, Forward Direct Selling Corp., and One Lightning Corp.

“The commission finds it appalling that a number of victims have admitted awareness of the illegality and non-sustainability of the investments they have made,” the notice read.

“However, because of the promise of quick and easy money that requires minimal or no efforts, not only did they invest their savings, borrowed money and sold properties but worse, they convinced their families, friends and relative to do the same,” it added.

A Ponzi scheme is a fraudulent investing scam that promises high rates of return with little risk to investors, relying on a constant stream of new investors to generate the promised returns for older investors. A pyramid scheme, on the other hand, usually comes in the form of multi-level marketing where participants earn through recruiting people, making the “down line” (new investor) funds go to the “up lines.”

“In recent months, scammers have employed novel schemes and devices that use gold, precious metals, hidden treasures, travel opportunities, cars, and other luxuries to make it difficult for the public to distinguish the genuine investment opportunities from the fraudulent ones,” the SEC said.

The state-owned regulator stressed that under the Securities Regulation Code Section 5.1, securities shall not be sold or offered for sale or distribution within the Philippines without prior registration with the SEC, adding that according to criminal laws, “no person shall engage in the business of buying or selling securities…unless registered with the commission.”

“Let this be a warning to those who invite or recruit other people to join or invest in these illegal ventures,” the SEC said.

“Except those qualified to become state witnesses, the commission through the Enforcement and Investor Protection offices shall not hesitate to invoke the full force of the law by imposing sanctions and by filing criminal charges against these violators,” it added.

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