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SEC revokes firm’s registration for illegal investment scheme

The Securities and Exchange Commission (SEC) has canceled the corporate registration of Bill Ford VIP Trading, Inc. for engaging in unauthorized investment activities resembling a Ponzi scheme. 

In an order issued April 14, the SEC Enforcement and Investor Protection Department (EIPD) found the group headed by a certain Billy Ford Delos Santos Andrada to have engaged in investment-taking activities by selling or offering securities to the public without the necessary secondary license from the Commission.

In doing so, BillFord Trading committed an ultra vires act under Section 44 of Republic Act No. 11232, or the Revised Corporation Code of the Philippines. 

The company’s activities also constituted serious misrepresentation as to what it can do, to the great prejudice of or damage to the general public, a ground for the revocation of a corporation’s certificate of registration under Presidential Decree No. 902-A, according to the order. 

The Commission has warned the public against investing in BillFord Trading as early as January 23, 2020 through an advisory, which the company neither responded to nor refuted. 

The EIPD subsequently issued a show cause order against BillFord Trading on February 10, 2021, directing the company to explain why its corporate registration should not be revoked. 

BillFord Trading’s investment scheme involved the sale of pigs for P2,500 each, with the promise of returning the investment that would then amount to P4,375 three months later. 

With this, an investor who buys five pigs worth P12,500 is guaranteed to get P21,875 by the end of three months, while someone who invests in 40 pigs worth P100,000 will get a gross profit of P175,000 after the same period.

BillFord Trading’s scheme involved securities, particularly an investment contract, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others, according to the EIPD. 

As a form of security, investment contracts must be registered with the SEC before they can be sold or offered within the Philippines, pursuant to Section 8 of Republic Act No. 8799, or the Securities Regulation Code. 

However, records of the Commission show that BillFord Trading is not authorized to solicit investments from the public as it has not secured the prior registration and/or license for such activities. 

The EIPD further noted that BillFord Trading’s main strategy is to earn from the recruitment of new members or investors, with the piggery business used as a front for its scheme. 

“Necessarily, this scheme is unsustainable, as it must rely on a continuous inflow of new investors in order to make payouts to earlier investors,” the order read. 

“To exacerbate matters, the scheme being offered by BillFord Trading Company/ Bill Ford VIP Trading Inc. is clearly in the nature of Ponzi scheme, where the profits or payouts shall be taken from incoming investors or additional pay-ins of existing members-investors considering that it does not have any underlying legitimate business from where it could source its promised return on investments to its investors.”

Moreover, BillFord Trading committed another instance of fraud when three of its incorporators, namely Trixie Faith M. Pena, Andrew James T. Balero, and Jethro John G. Reyes provided wrong addresses in the company’s Articles of Incorporation. 

“Wherefore, for violation of Section 44 of the Revised Corporation Code of the Philippines (R.A. 11232) in relation to Sections 8.1, 28.1 and 26.1 of the Securities Regulation Code, P.D. 902-A and Section 179 (j) of the RCCP, the Certificate of Incorporation and the registration of Bill Ford VIP Trading Inc. as a corporation, is hereby revoked,” the order read.

 

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