SEC cancels DNKC franchise over fraud

The Securities and Exchange Commission (SEC) has revoked DNKC Corp.’s corporate registration for illegally soliciting investments without a license.

In an order dated 13 May but released only on Thursday, the SEC’s Enforcement and Investor Protection Department (EIPD) found DNKC in violation of Section 44 of Republic Act 11232 or the Revised Corporation Code, Sections 8.1, 26.1, and 28.1 of the Securities Regulation Code, and Section 11 of the Financial Products and Services Consumer Protection Act (FCPA).

The SEC also imposed a P1-million fine and directed DNKC and its incorporators to pay another P1 million in administrative sanctions.

“In soliciting investments from the public without the necessary secondary license from the Commission... DNKC’s actions are unauthorized,” the SEC order stated.

Incorporated in May 2023, DNKC was primarily registered for wholesale and retail operations, with secondary purposes including running restaurants, coffee shops, beauty and wellness clinics. Its certificate of registration explicitly prohibited investment-taking activities.

All-in-one business project

Despite this, the company was found to be offering an “all-in-one business project” involving a rental business, dental spa, restaurant and beauty salon, promising a guaranteed 4.5 percent return and an additional 5 percent per referral.

“Considering that nowhere is it stated in its primary purpose that DNKC Corporation is authorized to engage in the selling or offering for sale of securities to the public, the activity of \[company] of selling or offering for sale of investments is considered an ultra vires act and therefore constitute serious misrepresentation,” the SEC added.

DNKC operated under multiple trade names, including KC Skin Care, JD’s CCTV Installation Services and Parts, DNKC Dental Spa, JD’s Garage, DNKC Staykation and DNKC Sports Club.

The SEC had already issued an advisory in December 2023 warning the public against investing in DNKC’s scheme.