SEC revokes online investment firm Yeheey's certificate of incorporation

The Securities and Exchange Commission (SEC) has revoked the certificate of incorporation of online investment firm Yeheey iTraffic Systme Inc. for alleged engagement in a "paid-to-click" scam.

In a statement issued on Wednesday, the SEC said its Enforcement and Investor Protection Department (EIPD) issued the revocation order against Yeheey last April "on the ground of serious misrepresentation of what the corporation can do or is doing to the great prejudice of or damage to the general public."

Citing information gathered and confirmed by the EIPD, the SEC said the online investment firm enticed members of the public to register as “premium subscribers” by paying P1,000 and to recruit more members in exchange for high returns.

"Yeheey then offered various ways for members to earn points and money. For instance, a member could earn 1,200 points by simply logging in and out four times daily for six days and $2 for every new member recruited," the corporate regulator said.

"The EIPD noted that such a scheme constitutes a public offering of securities, in the form of investment contracts, and requires a secondary license from the SEC, pursuant to Sections 8 and 12 of the Securities Regulation Code," it said.

The corporate regulator also said that separate certifications from the agency's Markets and Securities Regulation Department, Corporate Governance and Finance Department, and Company Registration Monitoring Department showed Yeheey neither obtained nor sought a permit to offer securities.

Besides, selling or offering for sale or distribution of securities in the Philippines was beyond the powers that Yeheey could have exercised under its articles of incorporation. 

“Considering that nowhere it is stated in the primary purpose that Yeheey is authorized to engage in the selling or offering for sale of securities to the public, the activity of YEHEEY of selling or offering for sale of investments is considered an ultra vires act and therefore constitute serious misrepresentation,” the SEC's EIPD said.

In addition, the SEC said that the EIPD found that Yeheey engaged in a "Ponzi scheme," an investment program that offers impossibly high returns and pays these returns to early investors out of the capital contributed by later investors.

This is prohibited under Section 26 of the Securities Regulation Code, it said.

The SEC's EIPD noted it received a categorical confirmation from the representatives of Yeheey, during a conference in August 2018, that 95 percent of membership fees collected from incoming members were given to old members to effect the different ways its members could earn money.

Under Section 6 of Presidential Decree 902-A, or the SEC Reorganization Act, the Commission can suspend, or revoke, after proper notice and hearing, the franchise or certificate of registration or corporations, partnerships or associations, on the ground of serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general public. 

The EIPD earlier issued an advisory against Yeheey in August 2018, following reports from the public that individuals or groups representing the corporation were enticing the public to invest in the entity online or through the internet. —Ted Cordero/KG, GMA News