The Securities and Exchange Commission (SEC) has ordered Scentko World Corp. and its parent firm, Brendahl Cruz Holdings Inc., to stop illegal solicitation of investments in the guise of marketing perfume and cosmetics products.
Under its “buy and earn” investment scheme, Scentkoworld entices the public to buy perfume and beauty products in exchange for “cash sales rewards” equivalent to 400 percent of the purchase price, the SEC said in a statement on Wednesday. For instance, a member is promised a return of P20,000 in about 30 days for simply buying a package worth P5,000, without having to resell the products.
The returns depend on how soon Scentkoworld can recruit new members. On top of cash sales rewards, a member may receive a referral fee equivalent to 10 percent of the amount invested by the new member.
This “buy and earn” program “satisfies all the elements of an investment contract, where there is investment of money in a common enterprise with expectation of profits derived primarily from the efforts of others,” the SEC said. However, these entities have sold and offered for sale securities, in the form of investment contracts, to the public without the necessary license from the SEC.
The SEC also discovered that Scentkoworld misrepresented the incorporation of Brendahl to falsely claim that it had secured a secondary license from the SEC. On social media, the group even claimed that Brendahl would soon buy a rural bank or could put up its own bank.
The cease-and-desist order (CDO) against the two entities were issued on Sept. 24. The order also covers their officers, directors, representatives, salesmen, agents and any and all persons claiming and acting for and in their behalf.
Scentkoworld and Brendahl were further enjoined from transacting business involving the funds in their depository banks, and from transferring, disposing or conveying in any other manner all related assets for the benefit of investors.
The SEC also directed them to cease their internet presence relating to their unauthorized investment-taking activities.
“The Commission will institute appropriate administrative and criminal action against any person/s or entities found to act as solicitors, information providers, salesmen, agents, brokers and dealers for and in behalf of the subject corporations,” the SEC order said.