MANILA – The Securities and Exchange Commission (SEC) has ordered Wellcons Unlimited Systems, Inc. to stop offering investment packages to the public without the necessary license from the Commission.
In an order dated June 23, the Commission en banc directed Wellcons to immediately cease and desist from engaging in the unlawful/unauthorized solicitation, offer and/or sale of securities until it has filed the requisite registration statement and secured the necessary approval from the SEC.
Wellcons, its president Merarie Pailagao, as well as its officers, operators, administrators, promoters, representatives, salesmen, agents, investment team planners, mentors, enablers, influencers, assigns, conduit entities, and subsidiaries have also been ordered to stop their investment solicitation activities, as well as to immediately cease their internet presence related to their unauthorized investment scheme.
They have also been prohibited from transacting any business involving funds in Wellcons’ depository banks, and from transferring, disposing, or conveying any related assets to ensure the preservation of the assets of the investors.
The SEC issued the cease and desist order after its Enforcement and Investor Protection Department found that Wellcons has been offering investment packages worth PHP2,500 to PHP13,890 under a so-called binary system, with guaranteed returns of up to PHP9,000 to PHP32,000 per day.
Members who avail of investment packages under the binary system can further earn through Wellcon’s Pangkabuhayan Program, where they can supposedly double their money within six months based on investment packages worth PHP1,500 to PHP5,000.
In addition, Wellcons promised leadership bonuses and referral fees, among others.
The scheme involves the sale and offer of securities to the public in the form of investment contracts, 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 SEC.
“(T)he commission finds that Wellcons is engaged in the unauthorized sale and/or offer of securities in the form of investment contract in violation of Section 8 of the (Securities Regulation Code (SRC)) because it has no license to carry out the same,” the order read.
Section 8 of Republic Act No. 8799, or the SRC, provides that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC.
While Wellcons is a duly registered corporation with the SEC, it has never secured a secondary license from the commission to operate as a broker/dealer of securities, nor is it a registered issuer of any securities.
The SEC has issued an advisory against Wellcons as early as February 2 to warn the public against investing in the group and similar entities.
“(I)t is clear that Wellcons’ business model which promises high return of investments is not sustainable, and can only be carried out as long as new investors continue to come in,” the commission en banc held.
“This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public. Thus, we hold that the act of Wellcons in selling/offering unregistered securities operates as a fraud to the public which, if unrestrained, will likely cause grave or irreparable injury or prejudice to the investing public,” it said. (PR)