SEC charges ‘boiler room’ firm

The Securities and Exchange Commission (SEC) has charged another "boiler room" company with estafa and violation of the Securities Regulation Code as part of an intensified crackdown on companies engaged in fraudulent investment schemes.

The SEC has filed a case against Barclays Group Inc. and its incorporators and directors, namely: Rolando Fernandez, Pedro Songco, Isagani Jose, Arturo Lapid and Enrique Beech Jr. for violating Sections 26 and 28 of the SRC which deal with fraudulent transactions and unlicensed buying and selling of securities.

The company’s brokers and telemarketers were likewise included in the charge sheet: Joseph Burke, Greg Weaver, Jason Scott, Sandy Porcalla, Cristy Cristobal, Chona Ramos and Luis Lao.

"In light of the growing number of boiler-room operation schemes which have victimized thousands of foreign investors around the world through fraudulent investment schemes, the SEC wants to send a strong message to the public that they will clamp down hard on any securities fraud operations and will not hesitate to enforce the full effect of the law," the SEC said in a statement.

The modus operandi of boiler room operations is to set up a corporation in the Philippines and without a secondary license, as required under the SRC, deals in securities. Using unlicensed brokers, dealers and telemarketers, they then engage in cold calling of "leads," usually names of CEOs, general managers, directors and other moneyed individuals abroad and offer their services alleging that they are qualified brokers/dealers in securities.

Once money has been collected from the unsuspecting clients or when they sense that the government is closing in on them, these companies close shop, leaving the investors with nothing. They later re-open under a different name.

Just two weeks ago, the SEC issued cease-and desist orders (CDOs), to two companies suspected of engaging in such acts. The latest CDOs were issued against United Capital Management Inc. and GEI Training & Services Center Inc. based on numerous complaints lodged at the SEC by foreign investors, domestic clients and even their own employees.

The two firms were among the latest in the SEC’s sweeping campaign to curb the illegal market activities of mostly foreign firms that have been using the Philippines as their base for their global investment racketeering.

Those previously ordered closed were Multitech Investments, Mendez Prior Europe, Saxon and Swift Inc., Knowle and Sachs Inc., Dukes and Co. Securities Corp., Muller and Sons Securities Management, Sherman Brothers Mgt. Ltd. and 16 other companies.