SEC sounds alarm on fuel firms' Investment offers

THE Securities and Exchange Commission (SEC) is warning investors about gasoline companies that offer investment programs via franchise agreements, co-franchisee agreements, partnership agreements, co-ownership contracts, among others.

“The commission has received reports that there has been a proliferation of offering and solicitation of investments for the purpose of setting up gasoline stations or investing in already existing small gasoline companies,” the regulator said in an advisory, which did not name specific entities.

It added that these programs say investors can generate profit “hasslefree.” Investors were told to just place their money in the scheme, sign the contract, and wait for the quarterly profit distribution.

The company would be handling the construction, management, and operation of the gas stations. Some companies would offer guaranteed profits, with the loss to be shouldered by them.

“The usual scheme of these small gasoline companies is to lure investors by advertising that they can co-own a gas station for a minimal amount of at least P300,000,” the SEC said.

These gasoline companies also offer subscriptions to its shares of stock, partnership agreements, where several partners can own a gas station, and co-franchisee contract, where a single gas station will be franchised and owned by several individuals.

The SEC said, “these kinds of contracts or investment schemes, no matter how they are called, would squarely fall under the definition of an ‘investment contract’ and/or subscription of ‘shares of stocks,’” which are under the regulatory jurisdiction of the commission.

“Any issuance of unregistered securities is illegal,” the commission said.

The list of registered issuers of securities with permits to offer and sell securities may be accessed via https://www.sec.gov.ph/registered-firmsindividuals-and-statistics/registeredfirms-and-individuals/.

“Investments not included in the list are deemed to be unregistered and therefore not authorized to be offered to the public,” the regulator said.

Meanwhile, the list of capital market institutions and individuals authorized to solicit investments is on the Capital Market Participants Registry System, http://cmprs.sec.gov.ph/.

Those who act as salesmen, brokers, dealers or agents for the unlicensed schemes offered by these entities may be prosecuted and be held liable under the Securities Regulation Code, the SEC said. They may be fined P5 million at most and/or face 21 years of imprisonment.

“The public is therefore advised to exercise caution in dealing with these gasoline companies or persons purporting to be their representatives,” the SEC said.