SEC quashes MCM Royalty registration

MANILA, Philippines — The Securities and Exchange Commission (SEC) has revoked the corporate registration of MCM Royalty Legacy International Inc. after finding that the company illegally solicited investments from the public.

In a statement on Friday, the SEC said its Enforcement and Investor Protection Department issued an order on Feb. 2 canceling the company’s registration after determining that it offered securities without the required registration and license from the commission.

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The violation breached Section 44 of Republic Act No. 11232, or the Revised Corporation Code, in relation to Section 6(i)(2) of Presidential Decree 902-A. The provision bars corporations from performing acts or exercising powers beyond what is allowed by law or stated in their Articles of Incorporation.

Also, the SEC ordered the company and its president, officers and directors to pay a P1 million fine. The officials were also barred from serving as directors of any corporation for five years from the issuance of the order.

According to the SEC, MCM Royalty was registered as a company engaged in wholesale trading of goods and merchandise, with a secondary purpose of conducting online advertising and e-commerce activities.

However, its articles of incorporation explicitly prohibited the company from soliciting, accepting or taking investment contracts from the public or issuing such instruments.

Despite this restriction, an investigation by the EIPD found that the firm had been selling investment contracts disguised as franchise agreements tied to several alleged businesses. These included travel and tours ticketing services, bills payment, e-loading services and wellness products. 

Promises of guaranteed profits

The SEC said investors were enticed to participate in the scheme through promises of guaranteed profits depending on the investment package they purchased. The Commission noted that the structure of the scheme resembled a Ponzi scheme, where returns paid to earlier investors are sourced from funds contributed by new investors. 

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In its order, the regulator said the company’s activities misled the public into believing it had the authority to deal in securities, constituting serious misrepresentation that could cause damage to investors.

The SEC reiterated its warning for the public to remain vigilant against investment offers that promise unusually high or guaranteed returns, noting that such schemes are often indicators of fraudulent activity. INQ