SEC cancels Katuwang Poultry’s registration
The Securities and Exchange Commission (SEC) has revoked the registration of Katuwang Poultry Chicken Egg Producing Co. as a partnership for illegally soliciting investments from the public online.
In an order dated July 29, the SEC Enforcement and Investor Protection Department (EIPD) found that Katuwang Poultry has been offering securities to the public through Facebook, without the necessary license from the Commission.
The partnership’s activities constituted serious misrepresentation as to what it can do, to the great prejudice of or damage to the general public, a ground for the revocation of a partnership’s certificate of registration under Presidential Decree No. 902-A, according to the order.
The Commission warned the public against investing in Katuwang Poultry as early as Sept. 21, 2021, through an advisory.
Katuwang Poultry has been offering investment packages worth at least P50,000, with promised returns of supposedly 48 percent to 120 percent within six months, depending on the amount invested.
Investors were also offered referral commissions of 10 percent for every new member they invite into the system.
Katuwang Poultry’s scheme involves securities, particularly an investment contract, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others, according to the EIPD.
As a form of security, investment contracts must be registered with the SEC before they can be sold or offered within the Philippines, pursuant to Section 8 of Republic Act No. 8799, or the Securities Regulation Code (SRC).
The act of Katuwang Poultry in allowing its members to discuss, orient and make the public familiar with its schemes and inviting them through its official Facebook page constitutes a public offering, which should be registered with the Commission.
Katuwang Poultry is a duly registered partnership with the SEC. However, it has never secured a secondary license from the Commission to operate as a broker/dealer of securities, nor is it a registered issuer of any securities.
“Based on the evidence gathered, Katuwang Poultry is engaged in the offering, solicitation and sale of securities to the public without the required registration statement duly filed and approved by the SEC,” the order read.
The EIPD likened the group’s investment offerings to a Ponzi scheme, where the returns paid to early investors are sourced from the capital contributed by later investors.
“The investment scheme of Katuwang Poultry also operates to defraud investors as it deceives the investing public by making it appear that it has the authority to deal in securities,” the EIPD said, noting that the group has been using the certificate of registration issued by the Commission to disguise itself as a legitimate investment.
“This amounts to serious misrepresentation as to what it can do or is doing to the damage and prejudice of the investing public.”
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