Public warned against BNYPAL’s ‘paluwagan’ scheme

MANILA, Philippines  -The Securities and Exchange Commission (SEC) has advised the public against transacting with BNYPAL & Trading, which it said was operating a paluwagan system akin to a Ponzi scheme.

In an advisory, the regulator said the entity headed by a certain Rohanie Velasco was also soliciting investments from the public without the necessary licenses.

The SEC said BNYPAL offered a return of 30 percent for investments no lower than P20,000 in just 10 days through paluwagan slots.

Paluwagan, which can be loosely translated to “for relief,” members contribute a fixed amount of money into a pool of funds. One member will first get his or her share, depending on a schedule, while the others will keep paying. As the fund grows, the other members will eventually get their “savings” on a rotating basis. In the case of BNYPAL, the SEC said it had no definite income matrix or computation.

‘Fake profits’

According to the SEC, a Ponzi scheme is where “monies from new investors are used in paying ‘fake profits’ to prior investors and is designed mainly to favor its top recruiters and prior risk takers and is detrimental to subsequent members in case of scarcity of new investors.”

READ: Proliferating Ponzi schemes

The regulator stressed that such an investment scheme was “fraudulent and unsustainable.”

Since it violates regulations, the SEC said it would never issue a license for it.

“[The] Securities Regulation Code requires that said offer and sale of securities must be duly registered with the commission and that the concerned entity and/or its agents should have the appropriate registration and/or license to sell such securities to the public,” the SEC stressed.

It warned BNYPAL brokers, dealers, agents, representatives and endorsers could be criminally liable. Penalties include a maximum fine of P5 million or 21 years of imprisonment, or both.

The regulator also cited Republic Act No. 11765 or the Financial Products and Services Consumer Protection, which prohibits selling of fraudulent investments, including schemes promising profits or returns “sourced from the investments or contributions made by the investors themselves and the offering or selling of investment schemes to the public without a license or permit from the SEC.”

The regulator is also encouraging the public to share information about the operations of BNYPAL. —Tyrone Jasper C. Piad INQ