SEC warns vs. 4 unregistered investment platforms
The Securities and Exchange Commission (SEC) has advised the public against dealing with four entities due to their unauthorized solicitation of investments without the necessary license from the Commission.
These firms are Octafx or Octa Trading, Binance, Kito-kiko Variety Shop or Kito-kiko Inc., and House of Forex or H. Flores Busiverage, ness Consultancy Services.
“Some of these groups' investment schemes or actions resemble a pyramid or Ponzi scheme, where investors earn through recruitment fees instead of the sale of actual products or services, and investors are paid using the contribution of new members,” said the SEC.
Based on the reports and information gathered by the Commission, Octafx has been actively employing promotional campaigns on various social media platforms to attract and entice Filipinos to engage in investment and trading activities using its platform.
In its website, Octa claims to offer the trading of over 300 financial instruments from a wide range of asset classes to wit: shares (foreign), indices (index funds), commodity derivatives, and foreign currency pairs. It also allows leverage trading for a maximum leverage ratio of 1:500.
“While it appears that the operators of the platform are registered broker/dealers overseas and the securities and investment offerings registered in various countries,” the SEC said that there are some requirements before securities and investment products can be sold or offered to the public in the Philippines.
These include the registration of securities being offering, that the securities must be issued by Sec-registered corporations or licensed dealers, and the issuer must have a secondary license to sell or offer securities to the public.
Based on the SEC’S database, the operator of Octa is not registered as a corporation in the Philippines and operates without the necessary license to sell or offer any form of securities.
Binance has also been actively employing promotional campaigns on various social media platforms to attract and entice Filipinos to engage in investment and trading activities using its platforms.
It also claims to operate a facility to trade financial instruments and offers investment products -- including spot trading using le
futures contracts, option contracts, cryptocurrency savings accounts, cryptocurrency staking services, and a platform for initial coin offerings.
Just as with Octa, while the operators of Binance appear to be registered brokers/dealers overseas, they are not registered with the SEC as a corporation and do not have the necessary license to sell or offer securities.
In the case of Kito-kiko, an online platform headed by its owner Rexcel Rose Cernero Sison, the SEC found it to be engaged in investment-taking activities in the Philippines which is not authorized by the Commission.
The firm claims to be a general merchandise online shop which offers different kitchenware and home plasticware. It also offers different “PASALO SLOTS” which offers different investment packages.
The SEC said the “pasalo slot” is synonymous to an investment contract which is clearly under the Commission’s regulatory power. Their activities involving the offer and sale of securities to the public where their investors need not exert any effort other than to invest or place money in its scheme in order to earn profit should be registered and controlled by the Commission.
Kito-kiko is not registered with the Commission as a corporation or partnership and is not authorized to solicit investment or placements from the public nor to issue investment contracts and other forms of securities.
Meanwhile, House of Forex or H. Flores Business Consultancy is allegedly engaged in the trading of foreign exchange currencies and the would-be investors may choose among several plans with its corresponding amount of minimum investment.
“In this regard, the public is made aware that an ‘investment contract’, which is a kind of securities, exists when there is an investment or placement of money in a common enterprise with a reasonable expectation of profits to be derived primarily in the efforts of others which is prominent in the scheme of House of Forex…,” said the SEC.
As such, the SEC said the SRC requires that securities must first be registered with this Commission before it can be offeredor sold to the public and the concerned entity and its agents should have the appropriate registration and license to offer and sell such securities to the public.
“Moreover, the scheme employed by House of Forex has the characteristics of a ‘Ponzi Scheme’ where money from new investors are used in paying ‘fake profits’ to prior investors and is designed mainly to favor its top recruiters and prior risk takers and is detrimental to subsequent participants if new investors become scarce,” said the SEC.
It added that, “the offering and selling of securities in the form of investment contracts using the ‘Ponzi Scheme’ which is fraudulent and unsustainable, is not a registrable security. The Commission will not issue a License to Sell Securities to the Public to persons or entities that are engaged in this business or scheme.”