SEC warns against perfume investment scam
MANILA, Philippines — The Securities and Exchange Commission (SEC) has warned the public against an illegal perfume investment scheme propagated by Scentko World Corp. and its parent firm, Brendahl Cruz Holdings Inc.
These entities have been promising a 400-percent return on their “buy and earn” program.
In an advisory posted on July 31, SEC’s Enforcement and Investor Protection Department noted that Scentko and Brendhal Cruz Holdings had not secured a secondary license to solicit investments from the public.
“In view thereof, the public is hereby advised to exercise caution in dealing with any individuals or group of persons soliciting investments or recruiting investors for and on behalf of Scentko and Brendahl Cruz Holdings,” the SEC said.
Under its investment scheme, Scentko entices the public to buy perfume and beauty products in exchange for “cash sales rewards” equivalent to 400 percent of the purchase price. For instance, a member is promised a return of P20,000 for simply buying a package worth P5,000.
A member may receive the promised return in more or less than 30 days, without having to resell the products, depending on how soon Scentko can recruit new members. Accordingly, the company encourages its members to recruit.
Aside from the cash sales rewards, Scentko promises a referral fee equivalent to 10 percent of the amount invested by the new member.
Scentko and Brendahl Cruz Holdings are registered as corporations. However, the issuance of a certificate of incorporation only grants an entity a juridical personality and does not constitute an authority to engage in activities requiring a secondary license from SEC, such as selling and offering securities.
Under Section 8 of Republic Act No. 8799, or the Securities Regulation Code (SRC), securities such as investment contracts must not be sold or offered for sale or distribution without a registration statement duly filed and approved by the SEC.
Section 28 of SRC further states that no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered with the SEC.
As such, those acting as salesman, broker or agent of Scentko and Brendahl Cruz Holdings may be prosecuted and held criminally liable. They may face a maximum fine of P5 million or imprisonment of 21 years or both.
Prior to this, SEC has flagged at least 42 illegal investment schemes so far this year.
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