THE Securities and Exchange Commission (SEC) has ordered ScentkoWorld Corp. and its supposed parent Brendahl Cruz Holdings, Inc. to stop operations after it was found to be illegally soliciting investments from the public.
In a statement Wednesday, the country’s corporate regulator said the commission en banc has issued a cease and desist order (CDO) dated Sept. 24 against the two firms, their officers, directors, representatives, salesmen, agents, and all other persons involved with the group.
The CDO directs the group to stop transacting business involving funds in their depository accounts, as well as “transferring, disposing, or conveying in any other manner all related assets for the benefit of investors.”
The groups must also withdraw all online presence related to their unauthorized investment-taking activities.
“Based on the evidence presented, the selling or the offering for sale of securities whether directly or indirectly, in the form of investment contract, without the necessary license or permit will operate as a fraud on investors or is likely to cause grave or irreparable injury or prejudice to the investing public. Thus, they must be restrained,” the commission said.
The SEC Enforcement and Investor Protection Department found evidence showing that ScentkoWorld and Brendahl have sold and offered securities in the form of investment contracts without the necessary license from the commission.
The commission also found that ScentkoWorld had been claiming that Brendahl has a secondary license from the commission, although data from the SEC Corporate Governance and Finance Department and Markets and Securities Regulation Department showed otherwise.
ScentkoWorld’s scheme supposedly involves a “buy and earn program,” where members will have to buy perfume and beauty products in exchange for “cash sales rewards” equal to 400% of the purchase price. This means that a member buying P5,000 worth of products could get a return of P20,000 within 30 days, depending on how soon the group can recruit new members.
People can also earn by recruiting more people into the system.
“The “Buy & Earn Program” of ScentkoWorld satisfies all the elements of an investment contract, where there is investment of money in a common enterprise with expectation of profits derived primarily from the efforts of others,” the SEC said.
The SEC added that making their activities known through social media sites Facebook and Youtube constitutes a public offering by the two companies.
Under the Securities Regulation Code, those acting as salesman, broker, or agent of ScentkoWorld and Brendahl may face a fine of up to P5 million or imprisonment of up to 21 years, or both.
“The Commission will institute appropriate administrative and criminal action against any person/s or entities found to act as solicitors, information providers, salesmen, agents, brokers, dealers or the like for and in behalf of the subject corporations,” according to the CDO. — Arra B. Francia