Scrutinize entities offering securities, SEC tells public

The Securities and Exchange Commission (SEC) has warned the public against entities posing as legitimate and reputable financial institutions that offer illegal investment products.

“The public is advised to protect themselves from obvious investment scams by making sure that he or she has done enough research and has equipped themselves with enough information about the entity and their business,” the SEC said.

The agency reminded the public that any business operating in the country must secure prior registration and acquire a secondary license to solicit investments from the public before engaging in any investment-taking activities.

“The mere fact that an entity has no secondary license granted by the SEC make their investment-taking activities illegal,” the agency said.

In addition, agents and promoters of scams and illegal investment-taking schemes often entice their prospective victims that their business has been running for a long time and has been paying their clients the promised profits.

“Even if an entity appears to be paying their clients the promised profits initially or for quite a time, it does not mean that they can sustain (it). If the entity has no product or service in exchange for the profits that they give to their investors, then that entity most probably employs a Ponzi scheme,” the SEC said.

A Ponzi scheme involves paying existing investors in a virtually nonexistent enterprise or business with the funds collected from new investors. The money given as a perceived profit to existing investors is actually taken from the money invested by new investors.

This business model, the SEC said, is proven unsustainable and is bound to crash when they run out of new investors as the business has no other way of producing money because they do not offer any real product or service in exchange for money.

When the business employs a Ponzi scheme, the public’s investment is never safe because the business can fail and collapse any given time as soon as they are not able to invite new investors to fund the promised profits to existing investors.

Some entities even runaway with the hard-earned money of investors even before the business crashes leaving both existing investors and newly invited investors high and dry because their money got taken away.

The SEC, meanwhile, has warned the public against investing in Elizabeth Esty Save Lives Binary Option Trading Inc., Bitprime Computer Software Trading or also known as Ariane Estonilio-Bitprime Software OPC and Upsys Daily Trading.

Elizabeth Esty claimed to be engaged in bitcoin trading and binary options trade, where they manage the investors’ accounts and trade for them using remote-controlled software that enables 100 percent return on investment and 10 times the invested capital within days.

Bitprime, meanwhile, claims to provide cryptocurrency services which generate income through cloud-mining investments, while Upsys offers investment plans with promised earnings of 2 percent to 4 percent daily or P900 up to P540,000 after a lock-in period of 3 months.

All of these actions, the SEC said, resemble a pyramid or Ponzi scheme, and should not be avoided by the public.


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