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SEC: Crowd1’s registration was to operate as BPO firm

The Securities and Exchange Commission (SEC) bared that the primary reason of Crowd1 as a registered corporation in the Commission was to engage in business processing outsourcing (BPO) services, not in offering what the company called as educational packages.

In a virtual presser last Friday, SEC – Davao Extension Office head Katrina Jamilla Ponco-Estares said that this was the reason why the SEC required Crowd1 Asia Pacific Inc. (Crowd1) to acquire a secondary license in conducting operations since its current system goes beyond its purpose as a registered corporation.

“Kasi registered nga siya sa amin so makikita ng (public) kung pupunta sila sa office, magre-request sila ng copy ng kanyang registration documents, makikita niya yung purpose doon. Yung purpose kasi na nakita namin is mag-engage dapat siya sa BPO,” she said.

Crowd1 is registered as a corporation on October 9, 2019 under Company Registration No. CS201917023 to conduct BPO activities only and they do not have a secondary license “to issue, sell or offer for sale securities to the public nor to undertake business activities.”

The registration also specified that Crowd1 would operate by “rendering inbound and outbound customer and client activities to business outside the country specifically receiving customer requests and enquiries and providing customer relations activities,” among other related activities.

The document also stated that “the corporation shall not solicit, accept, or take investments/placements from the public neither shall it issue investment contracts.”

BPO functions as a contractor of non-primary business activities to a third-party provider and it includes payroll, human resources (HR), accounting and customer/call center relations.

Ponco-Estares added that during their investigation they observed that the entity is 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 attain.

Because of the current system of operations of the entity which goes beyond their purpose as a registered corporation, the SEC raised a flag warning people on the schemes of Crowd1.

In a report of this paper yesterday, Jan Frostne, Crowd1 Asia Pacific regional manager, claimed the agency misunderstood its operations, although it is willing to cooperate in the proceedings especially in identifying involved individuals or groups who misrepresent Crowd1 and entice people to invest or solicit investments.

He added that the entity will inform the SEC on its products and services in order to clear out the misunderstanding.

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