Too good to be true rule

The AlphanetWorld Corp., or more prominently NWorld, saga is the perfect example of the business world’s dictum that if the return on investments sounds too good to be true it’s probably a scam.

An investigation by corporate regulator Securities and Exchange Commission (SEC) found that NWorld was offering investment packages from P4,750 to P19,000 with a promise of P127,000 per month profit.

On top of the “guaranteed earnings” were bonuses such as discounted rates, referral rebates and sales match perks, as well as the chance to earn up to P25,000 through NWorld’s “XX Cash” program.

The Court of Appeals (CA) upheld the SEC’s cease and desist order (CDO) against NWorld for soliciting public investments without the necessary licenses.

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 constituted an investment contract, a security under RA 8799 (Securities Regulation Code),” the CA ruled.

“It must be registered with the SEC before being sold to the public to protect investors from fraudulent securities,” it said.

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

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.

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.