State regulator Securities and Exchange Commission (SEC) has stepped up the monitoring of the local market for bogus online financial schemes amid the increase in electronic commerce due to the isolation impositions to protect people from coronavirus disease 2019 (COVID-19) infection.
Among the suspicious schemes that the SEC recently flagged was that of Lokal.Plate, which was found without authority to solicit investments, which it does through social media platforms particularly Facebook.
A copy of an advisory provided the Daily Tribune by lawyer Oliver Leonard, officer-in-charge of SEC’s Enforcement and Investor Protection Division, indicated that although Lokal.Plate Corp. has been registered as a corporation under Company Registry CS-202005888 on 7 August 2020, it is not allowed to accept money as investments.
It lacks a license prescribed under sections 8 and 28 of the Securities Regulation Code (SRC).
Lokal.Plate Corp. was also the subject of scrutiny by the National Bureau of Investigation (NBI) after the government investigating body received reports regarding different online businesses offering online franchises, including Lokal.Plate Corp.
NBI Agent Francis Senora of the Cybercrime Division said Lokal.Plate Corp. entices investors by offering “online franchisees” with a promised income of P40,000 to P80,000 a month.
“We have already conducted our initial inquiry. Likewise, we coordinated the same with the company (Lokal. Plate) and with related government agencies. We are still waiting for their replies,” Senora added.
According to the SEC advisory, released 24 November, a number of individuals or groups, represented by Lokal.Plate Corp. chief Brian James D. So, entice the public to invest.
“As posted online, Lokal.Plate offered investments to the public under the guise of franchising where a “franchisee” invests P12,888 to earn P40,000 to P80,000 per month. A franchisee only needs to share a link, which, when clicked by anyone who wanted to order from the affiliated food service provider of Lokal.Plate, the principal earns 15 percent to 20 percent of the purchase price of the ordered food,” the SEC said.
The SEC investigation also revealed that mechanics initiated by Lokal.Plate would have a franchisee being encouraged to recruit somebody.
The agent earns a commission of P3,000 for every direct referral.
Considering that the scheme involves the sale of securities to the public through investment contracts, the SRC requires registration with the SEC and that the corporation or its agents should also have a license as an agent pursuant to sections 8 and 28 of the SRC.
Franchising not in its license
Lokal.Plate’s primary purpose clause in its articles of incorporation does not include “franchising.”
The SEC stated in its ruling: “To engage in online selling of food, and promote, advertise such food products through online.
Provided that the corporation shall not solicit, accept, or take investments/placements from the public neither shall it issue investment contracts.
Further, those who act as salesmen, brokers, dealers or agents or claim to act as such for Lokal.Plate Corp. in selling or convincing people to invest in the scheme including solicitations and recruitment through the internet may be prosecuted and held criminally liable under section 28 of the SRC and penalized with a maximum fine of P5 million or a penalty of 21 years of imprisonment or both pursuant to section 73 of the SRC.
The SEC added that those who invite or recruit others to join or invest in such ventures or offer investment contracts or securities to the public face criminal liability.
Based on the certificate of incorporation, incorporators of Lokal.Plate Corp. include Christian Nathaniel Magundayao, Linus Emmanuel Taa, Simon Miguel David, Brian James So, Ninay Rile and Ralph Nathaniel Rile.