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SEC warns public vs unlicensed foreign firms

/ 04:06 AM September 14, 2021

The Securities and Exchange Commission (SEC) has urged the public to exercise caution when dealing with foreign entities— such as foreign currency, cryptocurrency, gambling and play-to-earn platforms—and check first if they are licensed to operate in the Philippines.

By law, an entity is required to register and obtain a primary registration with the SEC if they intend to conduct business in the country.

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“The public is reminded to be vigilant and to do their due diligence prior to transacting/dealing with any entity. The public is also advised to avoid transacting with corporations or entities without any registration or license to do business in the Philippines in order to avoid losing their earnings,” the SEC said in an advisory issued on Monday.

“If an entity or an activity is unlicensed or unregistered and is based abroad, you run the risk of not getting your money back once these are transmitted outside of the Philippines.”

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The SEC issued the advisory after receiving numerous inquiries regarding the implications of transacting with non-registered foreign corporations and entities whose products or services are available in the Philippines through their website or online apps and platforms.

A number of these unregistered entities allow Filipinos to access their online platforms and permit the enrollment, creation, or registration of client accounts through online means despite having no registration or license to do business here, the SEC said.

In some cases, the SEC said Filipinos were even targeted by their aggressive online advertisements in various social media networking sites like Facebook, YouTube or Instagram. Such unregistered online platforms include the following: foreign currency brokers and exchanges; digital asset/cryptocurrency/virtual asset exchanges; decentralized finance investment platforms; yield farming/staking platforms; multi-asset/multi-security brokerage companies; websites for securities token offerings/token generation events; illegal investment scheme websites; binary options trading apps; pay-to-click/captcha websites; play-to-earn gaming platforms; fiat/cryptocurrency gambling websites; and, various cryptocurrency-related investment websites.

“If you put your earnings in a platform which is reachable in the Philippines, but is operated by non-registered corporations or entities, the government can offer very limited protection or, in some cases, no protection from any harm, damage, fraud or any form of misconduct which may be caused or committed by these corporations or entities,” the SEC said.

It explained that jurisdiction over fraud or any form of misconduct committed by these corporations would fall under the jurisdiction of the foreign country where these entities operate.

“Domestic participants would have to go to the country where these platforms are registered and where they operate to file the appropriate complaint in order to seek redress,” the SEC said.

On the other hand, the SEC said dealing with registered domestic corporations or foreign corporations with registration to do business as a branch, regional operating/area headquarters or representative office within the Philippines assures domestic parties that they are duly protected by Philippine laws. INQ

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TAGS: Business, Securities and Exchange Commission (SEC)
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