Bukidnon firm ordered closed for selling unregistered securities
Securities and Exchange Commission (FILE PHOTO)
DAVAO CITY, Davao del Sur, Philippines – The Securities and Exchange Commission (SEC) has issued a cease-and-desist order against a Bukidnon-based company for allegedly selling unregistered securities.
In a June 23 order, the SEC issued the order against Wellcons Unlimited Systems Inc., which is based in Valencia City, on the recommendation of its Enforcement and Investor Protection Department (EIPD).
According to the 14-page order, Wellcons “made it appear to the public that it is authorized to sell, deal and offer securities in the form of investment contracts even when no such authority was ever issued to it.”
The registration of the company was for multilevel marketing. So it would need a secondary license to offer securities and similar investment instruments, according to the order.
The order added that the EIPD investigation showed that the authorized capital stock of the company was just P1 million, with only 25%, or P62,500, of the subscribed shares paid up.
“It is clear that Wellcons’ business model which promises high returns of investment is not sustainable, and can only be carried for as long as new investors continue to come in. This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public,” the order said.
The EIPD decided to investigate the company after receiving complaints in June 2021. The SEC then issued an advisory on Feb. 3, 2022.
The EIPD found that the company was offering “unregistered securities” through a binary system, or a “Pangkabuhayan” package.
Under the binary system, a prospective investor is offered three packages to choose from by paying the corresponding membership fee of P2,500 (which was reduced to P1,890) for Fast Track, P5,890 for Global, and P13,890 for Executive.
By doing so, the investor would be able to earn points depending on the package, be entitled to discounts on the products of the company, and would gain more by recruiting more members.
After payment of the membership fee, the member can avail of the “Pangkabuhayan” package, investing in the three more packages that promised guaranteed returns: P1,500 for bronze, P2,500 for silver, and P5,000 for gold.
In these packages, they would be given “consumable products.” The points that they earned would be converted to grocery items and would earn a share of the profits that the company would earn.
Their earnings would be on the basis of daily rewards that come with a guarantee that the amount they invested would double by the end of six months. Their earnings were called the “return of purchase upon maturity,” coming in six months after investing their money.
Investors were also promised a profit-sharing bonus of 20% of the company earnings distributed among 20,000 top member-investors, another 5% in loyalty rewards for the top 5,000 member-investors, and 5% in global pool rewards for the top 1,000 member-investors.
Those who would recruit more new members would also earn an additional amount under the leadership bonus depending on the rung of recruitment level.
In answer to the allegation of the EIPD, on March 25, Merarie Parilagao, company president, told the SEC that the company’s operations were legitimate as the bulk of its earnings came from selling health supplements, liniments, and beauty products.
RELATED STORIES
SEC orders closure of 5 online lenders
SEC orders closure of 2 firms for investment fraud
SEC orders closure of 4 illegal online lending apps
