CA upholds SEC’s cease-and-desist order vs Planpromatrix
The Court of Appeals (CA) has upheld an order issued by the Securities and Exchange Commission (SEC) stopping the investment solicitation activities of a multilevel marketing entity called Planpromatrix Online Co., which was called out for “perpetrating fraud and causing grave injury to the investing public.”
The corporate regulator issued a cease-and-desist order (CDO) against Planpromatrix on July 16, 2019 alleging it was hawking investment contracts under the guise of an electronic loading business and without securing the requisite license.
Planpromatrix assailed the validity of the CDO before the appellate court, questioning as well the finding of the SEC that its operations required a secondary license and registration statement, among others.
In a 17-page decision dated July 19, the CA Special 10th Division affirmed the CDO against Planpromatrix, which was soliciting money ranging from P600 to P1,850 and promising a share of earnings from an e-loading business, a data entry job and an advertising package. In ruling in favor of the SEC, the appellate court said: “[T]here is wisdom in the issuance and continuance of the CDO against petitioner.”
“There can be no debate on the authority of the SEC to issue the subject CDO, provided that the conditions therefor, i.e., that fraud has been perpetrated and grave injury is likely to be caused to the public, are extant,” it added.
The SEC had ruled that the business activities of Planpromatrix involved the sale of regulated securities and thus required a secondary license and registration statement pursuant to sections 8 and 12 of the Securities Regulation Code.
The CA noted the SEC had issued the order only after receiving complaints against Planpromatrix and conducting an investigation into its activities.
The SEC Markets and Securities Regulation Department, Corporate Governance and Finance Department and Company Registration and Monitoring Department issued certifications that Planpromatrix had neither a secondary license to solicit investments from the public nor the requisite registration statement.
An investigation also revealed this entity did not have the required business permit.
“Those considerations and their supporting documents muster more than a mere scintilla of proof and satisfy the required substantial evidence of fraud and grave injury committed against the investing public which are precisely the conditions sine qua non for the issuance by the SEC of the [CDO],” the CA held.
Accordingly, the appellate court ruled that the SEC did not violate due process with the issuance of the CDO, noting the order was not permanent or final and could have been refuted by evidence.
“[T]he subject CDO was not cast in stone that its efficacy and application are beyond challenge … Petitioner had the opportunity to cause the recall of the CDO; it availed of the opportunity; and with that, it was accorded due process,” the court said. INQ
