SEC orders 2 firms to stop selling securities to public

The Securities and Exchange Commission (SEC) has issued cease and desist orders against two companies that offer “fraudulent” investment schemes to the public and do not have the necessary license to sell securities.

In separate orders issued on May 28, the SEC ordered Fast Track Worldwide Inc. and Jocals688 Beauty and Wellness Products Trading Inc. to immediately cease and desist from soliciting investments from the public or engaging in similar activities as the two do not have the necessary permits to do so.

The SEC also prohibited the two firms from transacting any business involving funds in its depository banks, and from transferring, disposing of assets and to ensure the preservation of the assets for the benefit of the investors.

The cease and desist orders cover the corporations’ operators, partners, directors, officers, salespersons, agents, representatives, promoters, and all persons, conduit entities and subsidiaries claiming and acting for and on its behalf, the SEC said.

Fast Track was incorporated by Rey Aldwin Bautista Valeriano, James Rhyan Espinosa Guillera, Clive Christopher Cortez Llora, Jeneil Santos Aguilar and Jay Piscadero Gregorio on February 18, 2019, primarily “to engage in direct selling of goods and merchandises to consumers.”

Evidence gathered by the SEC Enforcement and Investor Protection Department revealed that Fast Track offered investment packages bundled with health, lifestyle, and nutrition products for P1,499 to P49,999.

Investors were guaranteed returns of as much as P3 million a year, as well as commissions and bonuses when they recruit more people to invest in the company.

The scheme, the agency said, already constituted the sale and offer of securities in the form of investment contracts, whereby a person invests money in a common enterprise and is led to expect profits primarily from the efforts of others.

Fast Track must have registered the scheme with and secured a secondary license to offer securities for sale from the Commission, in accordance with the Securities Regulation Code, the agency said.

“[I]t is clear that Fast Track is not authorized to sell andor offer the ‘Investment Packages’ to the public because they are securities in the form of investment contracts, and Fast Track does not have the requisite license from the Commission,” the SEC said.

“This undoubtedly warrants the issuance of a cease and desist order because the act of

Fast Track 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.”

Jocals688, meanwhile, was registered as a corporation on October 9, 2019, to engage in the sale, distribution, marketing and trading of goods, commodities and merchandise such as beauty and wellness products, coffee, juice and herbal products.

The company headquartered in Zamboanga del Sur named Joshua A. Calderon, Echochen M. Calderon, Noemie C. Ponce, Hanz R. Paler and Nino S. Agad-ad as directors in its articles of incorporation.

The SEC found that the company enticed members to deposit a minimum of P10,000 to earn P13,000 after a month. One can also become a member by purchasing a package of products for P3,800.

Members could earn by selling the products, but, they could supposedly receive bigger returns by simply recruiting more people into the scheme.

“Thus, in the absence of a secondary license, Jocals688 should be restrained from offering or selling securities in the form of investment contracts,” the SEC said.

The SEC also pointed out that the capitalization of Jocals688 only amounted to P1 million while it promised investors a guaranteed 37 percent monthly income.

“Clearly, Jocals688's business model and capitalization cannot sustain the promised returns of investment, especially if no new investors will come in,” it said.

“Pay-outs for investors are financed from investments of new recruits investors. This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public.”