SEC partners with police vs entity’s investment scheme

THE Securities and Exchange Commission (SEC) conducted a joint operation with the Philippine National Police-Criminal Investigation and Detection Group (PNP-CIDG) and Presidential Anti-Organized Crime Commission (PAOCC) to take down the “illegal investment solicitation activities” of Procap International, Inc.

In a statement, the SEC said it conducted an entrapment operation during an event organized by Procap in Makati City on Oct. 15, which led to the arrest of 20 individuals including the entity’s directors, incorporators, employees, and agents. Eight of the arrested individuals are foreigners.

“The PNP-CIDG carried out the entrapment operation, in coordination with the SEC and PAOCC, after receiving information that Procap engaged in illegal offering, solicitation, and selling of securities in the form of investment contracts without any secondary license from the SEC,” the corporate regulator said.

According to the SEC, Procap offers and sells securities in the form of investment contracts as gaming packages ranging from P73,000 to P4.3 million, which would entitle investors to play seven rounds of the entity’s prediction game.

The entity offers returns ranging from 6% to 42% per month with referral incentives for recruiting additional players.

“According to Procap, by following its formula, players will not incur any loss even if they get seven successive wrong predictions through its capital protection insurance where players can enjoy fresh seven rounds to play its game and so forth,” the SEC said.

Under Section 8 of Republic Act No. 8799 or the Securities Regulation Code (SRC), securities should not be sold or offered for sale or distribution within the Philippines without the registration statement duly filed and approved by the SEC.

Section 28 of the SRC also provides that no person should engage in the business of buying or selling securities in the country as a broker, dealer, salesman, or an associated person unless registered with the SEC.

Republic Act No. 11765 or the Financial Products and Services Consumer Protection Act (FCPA) also penalizes persons who commit investment fraud, which includes the offering or selling of investment schemes to the public without a license or permit from the SEC.

“Any person found violating any of the provisions of the SRC shall suffer a fine of as much as P5 million, or imprisonment of up to 21 years, or both,” the SEC said.

“In addition, a person found guilty of committing investment fraud under the FCPA shall suffer administrative sanctions, including a fine of up to P10 million for each instance of investment fraud plus P10,000 for each day of continuing violation,” it added. — Revin Mikhael D. Ochave