An official of the Securities and Exchange Commission (SEC) maintained that the Crowd1, which has become controversial following the advisory that the released last week, has no legal basis in securing investments.
This developed as the entity, in a statement released last week, claimed that it was legitimate and the SEC was “misinformed” of its transactions.
In an online press briefing Friday, however, Lawyer Jamilla Ponco-Estares, SEC – Davao Extension Office head, based on the investigation that the agency launched based on the complaints it received, the entity was “selling participatory income without an actual product, therefore it is a form of soliciting investments from the public requiring a secondary license which the entity was not able to obtain.”
Ponco Estares explained that securities are investment instruments that are agreements between parties to invest and has shares on the profit. Under the law, a company that engages in soliciting investments like securities need to secure secondary licenses aside from their certificates of incorporation.
In its statement, Crowd1 Asia Pacific Inc. (Crowd1) “strongly” objected to the advisory of SEC which stated that it was offering or soliciting securities and investments from its members.
“Crowd1 is registered with the SEC granting us juridical personality, and our operations fully operate within the legal area granted,” Regional Manager Asia Pacific Jan Frostne said.
Frostne reiterated that the terms and conditions of Crowd1 emphasized that it is not a financial institution but a paid “educational suite,” although the statement did not explain further the specifics of the suite.
“Crowd1 does not offer any token of ownership in a shared profits pool and all purchases involve a risk of full financial loss,” he added.
Prospective members were advised to do their research prior to engaging in businesses that include specific results or financial returns.
Although the statement did not explain as to what its business model is to assure profitability, its website stated that Crowd1 “does not sell any products of its own and it merely markets other companies’ digital products.”
SEC confirmed the registration of Crowd1 as a corporation on October 9, 2019 under Company Registration No. CS201917023, however, as previously reported, the entity was not able to acquire a secondary license “to issue, sell or offer for sale securities to the public nor to undertake business activities.”
According to the Securities Regulation Code, securities are “shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instruments, whether written or electronic in character.”
Frostne stated that they take the statements from the SEC seriously and the entity fully intends to cooperate in the proceedings especially in identifying involved individuals or groups who misrepresent Crowd1 and entice people to invest or solicit investments.
Crowd1 will inform the SEC on their products and services in order to clear out the misunderstanding.