SEC hunts owners of pseudo-investment firm

The Securities and Exchange Commission is hunting down the officers and owners of pseudo-investment firm LEAD Co. for selling unregistered securities in violation of the Securities Regulation Code.

SEC Chairman Lilia R. Bautista said the Commission is considering filing a criminal case against the owners of LEAD for offering investment contracts without prior registration with the corporate watchdog.

LEAD employs the same investment scheme as Multitel and Glasgow, which boasts of sky-high returns for a minimum investment of P10,000 to P50,000. Banks, on the other hand, can only give between one percent and two percent per year.

In the case of LEAD, investors are guaranteed a four percent monthly interest for a minimum placement of P20,000. They are issued post-dated checks, representing the promised interest and their principal investment.

Bautista said the number of complaints against LEAD has grown significantly in the past two months especially after checks issued by the company started to bounce, leaving investors with no choice but to seek redress from the SEC.

LEAD, whose office is located at 1861 Evangelista St., Barangay Pio del Pilar, Makati City, has reportedly defrauded hundreds of unsuspecting investors with at least P100 million.

To appease nagging investors, the management of LEAD immediately sought a meeting to explain what went wrong. During the same meeting, the officers of the company promised to pay investors back but did not say how.

Officers of LEAD even advised investors not to report the matter to the SEC, media and authorities otherwise they would not be able to withdraw their millions of pesos invested in the firm. However, the owners and officers of the company, could no longer be located.

In the past months, the SEC has issued several cease-and-desist orders against companies such as Glasgow Credit and Collection Services Inc., Multinational Telecom Investors Corp. (Multitel) headed by the controversial Rosario Baladjay, the Mateo Management Group, the Tibayan Group and Five Vision Enterprises for illegally selling securities without proper registration.

Pseudo investment firms offer unbelievably high interest rates and use high pressure sales techniques to entice the public to invest their hard-earned money.

Stepping up its drive against securities fraud, the SEC is now cracking down on pseudo-investment companies operating in the provinces.

Most of the pseudo-investment firms which had been apprehended by the SEC or have yet to be uncovered, appear to have shifted to the provinces to continue their illegal activities without the prying eyes of authorities.

Pseudo-investment firms feel they would be able to attract more investors in the provinces as there is less information available against dubious investment schemes.

To help unsuspecting investors reduce their chances of being cheated, the SEC has issued an advisory, warning the public against certain get-rich-quick schemes being employed by unscrupulous individuals to advance their personal interests.

The SEC has also warned the public against persons or companies that represent themselves as being authorized by the SEC to accept investments or to manage other people’s money. These people, according to the SEC, present their company’s certificate of incorporation just to show that they are legitimate securities market professionals or what they do is legal.

But the registration of a company with the SEC does not necessarily mean that it is authorized to provide financial services. Such activities generally require another secondary license from the SEC or Bangko Sentral ng Pilipinas.

The SEC has advised investors to report any suspicious investment proposals that they encounter to help stop the activities of these scam artists.