SEC issues closure order against CROWD1

The Securities and Exchange Commission (SEC) has issued a cease and desist order (CDO) for CROWD1 to stop soliciting and accepting investments, which the corporate regulator tagged as a "scheme disguised as a digital marketing business."

Dated May 12, the CDO directed all directors, officers, partners, representatives, salesmen, agents, and any and all persons connected to CROWD1 to stop engaging in the sale and offer of unregistered securities.

CROWD1 was also ordered to stop promoting its investment scheme in social media and other online platforms, as well as transacting any business involving funds in its depository banks.

According to the SEC, it issued the CDO after it found that CROWD1 operated a "fraudulent investment scheme consisting of the sale and/or offer of inexistent securities in the form of investment contracts to the public."

Investigation of the SEC showed that CROWD1 supposedly solicits and accepts investments from the public by offering "educational packages" ranging from P6,000 to P240,000.

The company was then reported to have promised member-investors five different bonuses such as streamline bonus, binary pairing bonus, fear of loss bonus, matching bonus, and residual bonus from games and gambling applications.

"Representing itself as a digital marketing business, CROWD1 claims it generates income from online games and facilitates the generation by its members of residual income from its affiliate gaming companies such as AFFIGLO and MIGGSTER," said the SEC.

The corporate regulator noted, however, that CROWD1's scheme required a secondary license under the Securities Regulation Code which was not granted.

"CROWD1 neither secured a secondary license to operate as a broker/dealer, registered as issuer of mutual funds, exchange-traded funds or proprietary/ nonproprietary shares, nor registered any securities pursuant to the SRC," it said.
 
"CROWD1 only registered as a corporation for the primary purpose of engaging in business process outsourcing services," added the SEC.

Similar CDOs have been issued to Lion City Finance Group Inc. and Payasian Pte. Ltd. Corporation for selling and or offering to the public securities in the form of investment contracts without the necessary licenses.—AOL, GMA News