The Court of Appeals (CA) has upheld the Securities and Exchange Commission’s (SEC) cease and desist order (CDO) against AlphanetWorld Corp., operating as NWorld, for soliciting public investments without the necessary license.

The CA’s 8th Division found that the SEC had followed due process in issuing the CDO, as NWorld was offering investments without registering or obtaining the required licenses from the SEC.

“The scheme used by NWorld clearly constitutes an investment contract, a security under RA No. 8799,” the CA ruled. “It must be registered with the SEC before being sold to the public to protect investors from fraudulent securities.”

The CA also noted that the SEC followed due process in issuing the CDO, giving NWorld sufficient opportunity to respond, including filing motions to lift the order and for reconsideration.

CDO permanent

The SEC first issued the CDO on 23 February 2022, ordering NWorld and its representatives to immediately stop soliciting investments without approval. On 19 July 2022, the SEC denied NWorld’s motion to lift the order, making the CDO permanent.

The SEC investigation revealed that NWorld was selling investment packages ranging from P4,750 to P19,000, with promised returns of up to P127,000 per month.

Investors were enticed with bonuses such as discounted rates, referral bonuses, and sales match bonuses, as well as the chance to earn up to P25,000 through NWorld’s “XX Cash” program.

NWorld’s offerings qualify as securities under Section 3 of Republic Act (RA) No. 8799, the Securities Regulation Code (SRC), which prohibits the sale of securities without proper registration.

In July 2022, the SEC also canceled NWorld’s corporate registration after discovering fraudulent practices, including the use of an invalid Tax Identification Number in its Articles of Incorporation.