THE Enforcement and Investor Protection Department of the Securities and Exchange Commission (SEC) has warned investors, particularly those in the city, that the investment-taking activities that offer “double-your money (DYMNs)” are illegal.
“(E)ntities proliferating such investment-taking schemes must be duly registered with the Commission and that any person or entity intending to offer and sell its investment contracts are required to secure the necessary registration and/or license from the Commission as provided under the Securities Regulation Code,” the department said in an advisory released last week.
It said those behind these schemes “do not have a real business model to back up the profits that are going to be given to prospective investors. Essentially, the income generated from the foregoing investment-taking scheme depends on the number of referrals, membership fees and/or prior investments received by the entities.”
It added that these schemes have “the characteristics of a `Ponzi Scheme’ where the ‘income’ given to the initial investors are taken from the subsequent investors.” “This business model is unsustainable and will inevitably result in the demise of the business which directly results in the prejudice of the investors,” it pointed out.
The advisory came about after the SEC-Davao Extension Office posted a warning to the public in March about the existence of these investment schemes.
The office warned of individuals who were soliciting investments from the public with the promise to double the money in just a month.
After the warning was raised, several individuals went to the City Anti-Scam Unit to complained that they could not recover their investments.
Simplicio Sagarino, head of the unit, said that based on the complaints from about 20 individuals, the person soliciting the money from them has run away.
Sagarino added that before the situation soured, the person, a young woman, would transact with them just inside a vehicle.
