SEC issues cease and desist order against Procap
The Securities and Exchange Commission (SEC) has ordered Procap to stop unauthorized solicitation activities after the company was found pursuing its illegal investment scheme to the public.
The corporate regulator has issued a cease and desist order against Procap International Inc., Procap Insur and Procap Insurtech Ltd. following a motion for issuance by the commission’s Enforcement and Investor Protection Department (EIPD).
In the order promulgated on Feb. 8, the SEC ordered Procap, as well as its partners, officers and representatives to “immediately cease and desist under pain of contempt” from further offering for sale securities in the form of investment contracts.
They were likewise directed to immediately cease their internet presence relating to the transactions and investment scheme.
In coordination with the SEC and the Presidential Anti-Organized Crime Commission, the Philippine National Police’s Criminal Investigation and Detection Group conducted an entrapment operation during an event organized by Procap in a hotel in Makati City last October.
The entrapment operation led to the arrest of 20 individuals, including the directors, incorporators, employees and agents of Procap, for engaging in the illegal offering, solicitation and selling of securities in the form of investment contracts without the requisite license from the SEC.
However, the SEC said the event did not deter Procap from carrying out its unauthorized investmenttaking activities, which led to the EIPD filing a motion for issuance of a cease and desist order.
According to the SEC, the EIPD showed another evidence that Procap was continuously offering its unregistered securities.
It said the company invited the public to join its business presentations via Zoom platform last Jan. 23 for such purpose.
The SEC said Procap offers and sells securities in the form of investment contracts to prospective investors in the guise of gaming packages from P73,000 to P4.3 million.
These packages entitle investors or players to play seven rounds of its prediction game, with returns ranging from six percent to 42 percent per month with referral incentives for recruiting additional players.
By following its formula, Procap claims that 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 Section 8 of the Securities Regulation Code (SRC) provides that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the commission.
Section 28 of the SRC further provides that no person shall engage in the business of buying or selling securities in the Philippine as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered as such with the SEC.