SEC issues cease and desist order against Wellcons

THE Securities and Exchange Commission (SEC) has ordered Wellcons Unlimited Systems Inc. to stop offering investment packages, saying the system it created is akin to pyramiding.

The SEC ordered Wellcons, led by its president Merarie E. Pailagao, to immediately cease and desist from engaging in the unlawful and unauthorized solicitation, offer and sale of securities until it has filed the requisite registration statement and secured the necessary approval from the commission.

The SEC issued the cease and desist order after the agency’s Enforcement and Investor Protection Department found that Wellcons has been offering investment packages worth P2,500 to P13,890 under a so-called binary system, with guaranteed returns of up to P9,000 to P32,000 per day.

Each member also has to recruit members for them to get direct or indirect referral bonuses.

Members who availed investment packages under the system can further earn through Wellcon’s Pangkabuhayan Program, where they can supposedly double their money within six months based on investment packages worth P1,500 to P5,000.

In addition, Wellcons promised leadership bonuses and referral fees.

The scheme involves the sale and offer of securities to the public in the form of investment contracts, 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 SEC.

“[T]he commission finds that Wellcons is engaged in the unauthorized sale and/or offer of securities in the form of investment contract in violation of Section 8 of the [Securities Regulation Code (SRC)] because it has no license to carry out the same,” the SEC order read.

While Wellcons is a duly registered corporation with the SEC, 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.

The SEC has issued an advisory against Wellcons as early as February 2, to warn the public against investing in the group and similar entities.

“[I]t is clear that Wellcons’ business model which promises high return of investments is not sustainable, and can only be carried out as long as new investors continue to come in,” the SEC said.

“This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public. Thus, we hold that the act of Wellcons in selling/offering unregistered securities operates as a fraud to the public which, if unrestrained, will likely cause grave or irreparable injury or prejudice to the investing public.”