SEC revokes incorporation of Yeheey iTraffic System
MANILA, Philippines — The Securities and Exchange Commission (SEC) has revoked the incorporation of Yeheey iTraffic System Inc., which was found out to be selling securities without license and engaging in a Ponzi investment scheme.
SEC’s Enforcement and Investor Protection Department (EIPD) has revoked the firm’s certificate of incorporation on April 4 on the ground of serious misrepresentation of what the corporation can do or is doing to the great prejudice of or damage to the general public.
Based on information gathered and confirmed by EIPD, the corporation coaxed people to register as “premium subscribers” by paying P1,000, and to recruit more members in exchange for high returns.
Yeheey then offered various ways for members to earn points and money. For instance, a member could earn 1,200 points by simply logging in and out four times daily for six days and $2 for every new member recruited.
EIPD noted that such a scheme constituted a public offering of securities, in the form of investment contracts, and thus required a secondary license from SEC pursuant to Sections 8 and 12 of the Securities Regulation Code.
Separate certifications from SEC’s Markets and Securities Regulation Department, Corporate Governance and Finance Department, and Company Registration Monitoring Department showed that Yeheey neither obtained nor sought a permit to offer securities.
The selling or offering for sale or distribution of securities in the Philippines was beyond the powers that Yeheey could have exercised under its articles of incorporation, SEC said.
“Considering that nowhere it is stated in the primary purpose that Yeheey is authorized to engage in the selling or offering for sale of securities to the public, the activity of YEHEEY of selling or offering for sale of investments is considered an ultra vires act and therefore constitute serious misrepresentation,” EIPD noted.
In addition, EIPD found that Yeheey engaged in a Ponzi scheme, an investment program that offers impossibly high returns and pays these returns to early investors out of the capital contributed by later investors. This is prohibited under Section 26 of the Securities Regulation Code.
EIPD noted it received a categorical confirmation from the representatives of Yeheey, during a conference in August 2018, that 95 percent of membership fees collected from incoming members were given to old members to effect the different ways its members could earn money.
Under Section 6 of Presidential Decree 902-A, or SEC Reorganization Act, the Commission can suspend, or revoke, after proper notice and hearing, the franchise or certificate of registration or corporations, partnerships or associations, on the ground of serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general public.
EIPD issued an advisory against Yeheey in August 2018, following reports from the public that individuals or groups representing the corporation were enticing the public to invest in the entity online or through the internet.
In the advisory, EIPD also reiterated its warning about the proliferation of investment scams conducted by online-based advertising companies through paid-to-click programs.
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