6 Ways the SEC Protects You from Scams

Published: September 7, 2015 | Updated: June 25, 2020 | Posted by: Moneymax | Government Services


SEC protects you from scams
It’s only September, yet the Securities and Exchange Commission (SEC) has already released more than 15 warnings – higher than the 12 released in the whole of 2014 – against scams. With over billions of pesos lost in these illegal activities, Filipinos should guard their hard-earned money and not be persuaded by the ‘guaranteed returns’ these scams promote. Fortunately, the SEC is doing its best to warn Filipinos of potential scams.

In a statement, the SEC has declared that it will “not hesitate to invoke the full force of the law by imposing sanctions and by filing criminal charges against these violators”. But just how does the SEC actually protect you against scams?

How SEC Protects You from Scams

1. Giving Filipinos the right information

The SEC released an investment scam checklist Filipinos can use to determine whether or not the business they are dealing with is legitimate. The checklist includes getting the following:

  • Name of the person
  • Name of the company
  • Address of the person and the company
  • Landline number (not mobile number)
  • SEC registration

The following information allows you to validate the person and the company’s credibility. You can also check the person’s name on LinkedIn and look for positive or negative news mentioning the company presenting you with the opportunity. By doing a little bit of background checking, you can protect yourself from falling victim.

2. Releasing warnings against fraudulent companies

It’s best to keep up-to-date with the SEC’s notices to stay informed of possible scams. In addition, the advisories released by the SEC are distributed by the country’s major publications to catch a wider audience. Social media is also another avenue to inform our kapwa Pinoys. It’s essential that more Filipinos are made aware of these scams.
In the past months, the SEC has released warnings against the following:

  • Global Intergold (formerly Emgoldex)
  • Gold XTreme Trading Trading Co.
  • One Dream Global Marketing, Inc.
  • One Lighting Corporation
  • Success 2000 International Marketing Corp.

3. Registering legitimate companies

If the company doesn’t have an SEC registration or license to accept investments, turn away. Under Sec. 5.1 of the Securities Regulation Code, “securities shall not be sold or offered for sale or distribution within the Philippines without prior registration with the SEC”.

One of the main functions of the SEC is to protect investors by maintaining orderly and efficient markets. A company that operates justly will abide by the rules of the government, and one of the basic steps is by registering in the necessary institutions.

Aside from the SEC registration, SEC assistant director for Investigation and Prosecution Division Lalaine Monserate advises the public “to look for secondary registration since SEC registration is not enough”. Look for BIR, DTI, or SSS registrations before engaging with any company, especially if they’re asking for money.

4. Suspending scammers with cease-and-desist orders (CDOs)

These are orders given by the SEC to prohibit (temporarily or permanently) companies from operating under the suspicion of partaking in illegal or fraudulent activities. It’s a function of the SEC that all registered companies comply with the rules and regulations of the governing body. CDOs protect the investing public from fraud by halting the activities of deceptive companies. The SEC website has a complete list of companies that have CDOs issued against them.

5. Bringing criminal charges against unregistered companies

Recruiters of unregistered investment-related companies will face criminal charges if caught, the SEC warned. If the defendant (the person accused of a crime) is found guilty, this leads to dire consequences.

6. Giving the authority to solicit investments

Just because a company is SEC registered, it doesn’t mean it is a legitimate investment company. Anyone can register with the SEC, but not everyone is granted the authority to sell investments. For a complete list of companies permitted to sell investments, it’s best to check the SEC website. In addition, if a company registers with the SEC as a financial, banking, or quasi-banking entity, it also needs an endorsement from the Bangko Sentral ng Pilipinas (BSP).

How You Can Pinpoint a Scam

The SEC does its best to keep Filipinos informed on potential scams; however, despite the numerous warnings, many still fall prey to these frauds since they pop up at unlikely places – Facebook news feeds and personal referrals to name a few. When the SEC isn’t there to warn us, it’s best to stay alert. Here are 3 other things to look out for to pinpoint a scam:

1. Effortless and impressive ROIs

Scam victims are duped with the sway of easy money. The stock market is one of the high-risk, high-reward environments, but even after the 2008 Financial Crisis, the highest the Philippine Stock Exchange index was able to bounce back on a yearly basis was 33% – from 3,426.46 (Aug 2, 2010) to 4,550.53 (Aug 01, 2011). If someone promises to double your month in x amounts of days, alarm bells should be ringing in your head. Not even the stock market could promise you that great of a return.

2. Name changing

A company’s name is part of its brand which the public associates the company with. If someone approaches you introducing an investment opportunity with company X and months after, Company X changed its name to Company Y due to “relocation purposes”, you’re most likely dealing with a scam. No reputable company with longstanding credibility will change its name since the name is part of the brand.

3. Recruitment model

If you have to recruit other people to make money, stay away. According to the SEC, “legitimate multi-level marketing companies focus on marketing efforts rather than recruitment”.

If a company presents you with an opportunity to double your Php 50,000 by recruiting at least five other people who will inject their own cash, it’s best to be wary. It’s time to question whether they’re making money from the investments or their recruitment schemes.

Protect Your Hard-Earned Money

If something’s too good to be true, it probably is. And investments are no exception. Don’t be blinded by the high returns. If it were really that easy to double the money, everyone would be rich. In addition, never invest your hard-earned money blindly; the same holds true for legitimate investments such as stocks and real estate, even more so with scams. When you’re presented with an investment opportunity, it’s best to keep your guard up and check the SEC website for any news and notices regarding the company.