MANILA – The Securities and Exchange Commission (SEC) has directed Wellcons Unlimited Systems, Inc. to stop offering investment packages to the general public without first obtaining the required license from the Commission.
In an order dated June 23, the Commission en banc ordered Wellcons to immediately halt and desist from engaging in the unlawful/unauthorized solicitation, offer, and/or sale of securities until it has filed the required registration statement and obtained SEC approval.
Wellcons, its president Merarie Pailagao, as well as its officers, operators, administrators, promoters, representatives, salesmen, agents, investment team planners, mentors, enablers, influencers, assigns, conduit entities, and subsidiaries have also been ordered to stop their investment solicitation activities, as well as to immediately cease their internet presence related to their unauthorized investment scheme.
In order to preserve the investors’ assets, they are barred from conducting any transaction involving funds in Wellcons’ depository banks and from transferring, disposing of, or conveying any associated assets.
The SEC released the cease and desist order after its Enforcement and Investor Protection Department discovered that Wellcons has been offering investment packages ranging from PHP2,500 to PHP13,890 with guaranteed profits of PHP9,000 to PHP32,000 per day under a so-called binary system.
Members who purchase investment packages under the binary system could possibly double their money in six months through Wellcon’s Pangkabuhayan Program, which offers investment packages ranging from PHP1,500 to PHP5,000.
Wellcons also promised leadership bonuses and referral fees, among others.
According to the SEC, the scheme involves the public sale and offer of securities in the form of investment contracts, whereby a person invests his money in a shared venture and is persuaded to expect that he will profit primarily from the efforts of others.
“(T)he commission finds that Wellcons is engaged in the unauthorized sale and/or offer of securities in the form of investment contract in violation of Section 8 of the (Securities Regulation Code (SRC)) because it has no license to carry out the same,” the order read.
Under Section 8 of Republic Act No. 8799, or the SRC, securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC.
Although Wellcons is a legally registered corporation with the SEC, it has never obtained a secondary license from the commission to operate as a broker-dealer or issuer of any securities.
As early as February 2, the SEC issued an advisory against Wellcons, warning the public against investing in the group and related entities.
“(I)t is clear that Wellcons’ business model which promises high return of investments is not sustainable, and can only be carried out as long as new investors continue to come in,” the commission en banc held.
“This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public. Thus, we hold that the act of Wellcons in selling/offering unregistered securities operates as a fraud to the public which, if unrestrained, will likely cause grave or irreparable injury or prejudice to the investing public,” it said.
