SEC stops Unicap from soliciting investments

The Securities and Exchange Commission (SEC) has ordered suspected "boiler room" firm United Capital Management to permanently stop its operations and threatened it with other administrative sanctions, including penalties and the revocation of its corporate registration.

In an order, the commission en banc permanently restrained Unicap from further soliciting and and/or accepting investments from the public after the company failed to request for the lifting of an earlier cease-and-desist order (CDO) issued on May 23, 2001.

Unicap was among a number of so-called boiler room operators which were the subject of an intensive crackdown by the SEC, with the help of other government agencies such as the National Bureau of Investigation, as mounting complaints of anomalies by foreign investors and domestic clients against these companies flooded the corporate regulator.

Unicap, which was registered in March 1999 to sell consumer food products and other commodities in retail and wholesale, was closed down after its clients said they have been defrauded of their investments in foreign securities, although the company was never licensed as broker/dealer in securities.

"As Unicap has not been licensed to engage in the buying or selling of securities and considering the serious nature of the misrepresentation committed and the commission of ‘ultra vires’ act, there is an urgent necessity of restrain or enjoin subject corporation from engaging as broker/dealer in securities in order to safeguard and protect the interest of the investing public in general," the SEC said.

Boiler room operators set up a corporation and without a secondary license, as required under the Securities Regulation Code, 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 there is knowledge that the government is closing in on the illegal practise, these companies then close shop and soon re-open under a different name, leaving the investors with nothing. – Conrado Diaz Jr.