SEC axes Seek Explore over illegal investment scheme

SEC axes Seek Explore over illegal investment scheme | Daily Tribune

The Securities and Exchange Commission (SEC) has shut down Seek Explore Sports Association Inc., pulling its corporate registration after finding that the group had lured the public into an illegal investment scheme promising fast, outsized returns without regulatory approval.

Citing an order dated 12 December, the SEC said Tuesday that its Enforcement and Investor Protection Department (EIPD) revoked Seek Explore’s certificate of incorporation for violating Section 44 of Republic Act 11232, or the Revised Corporation Code (RCC), in relation to Sections 8.1, 26, and 28.1 of Republic Act 8799, or the Securities Regulation Code (SRC).

The Commission also slapped Seek Explore with an administrative fine of P1 million.

While Seek Explore claimed in its articles of incorporation that it was focused on community health, education, and livelihood programs, regulators found that its actual operations told a very different story.

Probe reveals high earnings, promised commissions

Following an investigation, the EIPD said Seek Explore offered unregistered securities to the public for as little as P500 and as much as P140,000, dangling promised earnings ranging from P30 after just three days to up to P1.79 million after 150 days, depending on the plan chosen. Investors were also promised commissions of up to 17 percent.

The regulator said the setup resembled a Ponzi scheme, where early investors are paid using money from later participants rather than from legitimate business activity.

“The act of [Seek Explore] through its affiliates in allowing certain persons acting as their agents or representatives to make public presentations of their investment scheme, inviting the public to invest in the companies through social media, renders them liable for the unauthorized public offering of securities and the misrepresentation committed in connection with such public offering,” the order read.

Ponzi scheme

“The offering and selling of securities in the form of investment contracts using the ‘Ponzi Scheme’ which is fraudulent and unsustainable, is not a registrable security. The Commission will not issue a License to Sell Securities to the Public to persons or entities that are engaged in this business or scheme,” it added.

Under Section 44 of the RCC, corporations are barred from exercising powers beyond those granted by law or their articles of incorporation.

The SRC, meanwhile, prohibits the sale or offering of securities without SEC approval, requires sellers of securities to be registered, and outlaws fraudulent transactions tied to investment offerings.