The Securities and Exchange Commission has filed for a cease and desist order before the Department of Justice against three related firms for supposedly selling unregistered securities and without a license.
The case filed on Thursday noted the companies violated Sections 8 and 28 of the Securities Regulation Code (SRC) of the Philippines. Each violation is punishable with a fine of not more than P5 million or imprisonment of seven to 21 years, or both, once the respondents are convicted.
The Department of Finance (DOF) on Friday named the as EmGoldex, Global Intergold, and Prosperous Infinite Philippines Holdings Corp.
DOF said the case against the companies was developed after months of investigation, including previous advisories and disclaimers against EmGoldex.
The SEC was able to gather evidence with the help of the Department of interior and Local Government, Philippine National Police, and National Bureau of Investigation. The affidavits of two PNP officials who fell victim to the scam was also used in developing the case file.
“They have also recruited at least 95 investors. An estimated P2,718,400.00 in cash investment has already been made by them with an estimated return loss of about P11 million,” the DOF said.
“The selling and marketing of unregistered securities by EmGoldex, GIG, and PIPHC are largely done online,” the DOF said.
EmGoldex, the original entity, was renamed into Global Intergold after the SEC issued a warning against the company, the Finance Department said.
Prosperous Infinite was incorporated on August 2015, supposedly to help investors in Global Intergold who were unable to get a return on investment, according to the DOF.
“Currently, EmGoldex is already banned in other countries based on international media reports,” the department said.
The three companies operated a classic Ponzi scheme, SEC Enforcement and Investor Protection Department Assistant Director Lalaine Monserate noted.
In a Ponzi scheme, a company recruits high-flying investors with the promise of high returns by recruiting other investors – creating a pyramid-like organizational structure of investors. As more people get onboard, the reaches a point where it can no longer sustain its operations.
The SEC also warned the public about an upcoming event of the three companies on Sunday, November 8, at the SMX Convention Center. An estimated 2,000 people are supposedly expected to attend the event. – Jon Viktor Cabuenas/VS, GMA News