SEC to crack down on Everflow

The Securities and Exchange Commission is set to issue an order prohibiting the Everflow group of companies, owned by a certain Feliz and Iris Aquino, from further soliciting investments from the public.

Tomas Syquia, head of the SEC’s Compliance and Enforcement Department, said they have already referred to the Commission en banc their recommendation for the issuance of a cease-and-desist order against the Everflow group and 10 other companies that were found to have been selling securities without a license.

The group with offices at the ground floor of Electra House building in Legaspi Village, Makati City, is reportedly composed of Everflow International Management, Everflow Holdings Inc. and Sun Ocean International Management.

"We have already asked the Commission en banc to approve our recommendation. We have sought the issuance of a CDO against the Group," Syquia said.

The CDO, according to Syquia, is intended to protect the public from firms engaging in the illegal solicitation of investments.

Based on initial reports, the Everflow group has been promising investors a monthly interest of 10 to 15 percent for a minimum placement of P50,000 for period of three to six months, plus the return of their investment at the end of the holding period.

SEC officials said the investment contracts issued by Everflow to investors fall under the Securities Regulation Code’s (SRC) definition of securities and should therefore have been registered with the Commission prior to distribution to the public.

An investment contract is defined under the SRC as a "contract, transaction or scheme… whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others."

Due to the sudden surge of pseudo investment corporations and broker-dealers, and bogus foundations and foreign currency futures exchange companies, the SEC has issued a warning to the public that the SEC certificate of incorporation being used by these corporations to lure investors, does not automatically authorize a corporation to operate as such unless it has secured a secondary license from the Commission.

"The SEC certificate of incorporation only grants juridical personality but does not automatically authorize a corporation to operate if its business requires a secondary license from SEC or the appropriate government agency such as the Bangko Sentral ng Pilipinas for banks, the Housing and Land Use Regulatory board for subdivision and condominium developers, etc.," the SEC said in an advisory issued to the public yesterday.

The activities requiring a secondary license from the Commission are the following: broker or dealer in securities, government securities eligible dealer, investment adviser, close-end or open-end investment company, investment house, transfer agent, commodity/financial futures exchange, pre-need plan issuer, general agent in pre-need plans, and time shares/club shares/membership certificates issuers or selling agents.

The SEC has also warned the public against dealing with Portfolio Management Services, the alleged local agent of Eurolink Investment Services Inc., and the Overseas Workers Stock Capital (OWSC).

According to the CED, both Portfolio and OWSC are not registered with the SEC as a corporation nor as a partnership, and, therefore, have no legal personality.

The advisory was issued by the SEC due to numerous inquiries from various misleading statement that it is a duly-registered domestic company.

Syquia said the SEC is looking at 20 other companies that have similar operations.