Lead Lending has reportedly defrauded hundreds of unsuspecting investors at least P100 million into the company.
Operating at its principal office in Sucat, Parañaque, Lead Lending was found to have sold securities to more than 19 investors without prior registration with the SEC. The company is headed by its president Gaudencio C. Maximo.
Citing Section 8.1 of the Securities Regulation Code, the SEC said no securities shall be sold or offered to the public without a registration statement duly filed with and approved by the Commission.
Aside from the cease-and-desist order (CDO), Lead Lending was also charged with violation of the Corporation Code for having engaged in acts beyond the scope of its authority. The firm was registered with the SEC as a lending investor in 1998. A Lending company is allowed to solicit funds from not more than 19 investors.
For a minimum placement of P20,000 a three-month period, investors are guaranteed a return of four percent interest a month. They are issued post-dated checks, representing the promised interest and their principal investment. The contract is renewable after the expiration of the term of the original contract.
"Clearly, there is a transaction or scheme involving the investment of money. There is the element of expectation of profits primarily from the efforts of others since the participation of the investors are limited to placing their money and then collecting the promised returns as each post-dated check fall due without any effort on the part of the investors," the SEC said in its CDO issued last May 30.
The src defines securities as "shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character."
"Based on the evidence and supporting documents so far presented, the SEC is convinced that there is a prima facie case that the company is engaged in the unauthorized offering, solicitation and placement of investments from the general public without the necessary license," the SEC said.
The SEC said the CDO however, should not prevent Lead Lending from returning the investments or contributions made by investors.
In the past, the SEC had issued several CDOs against companies such as Glasgow Credit and Collection Services Inc., Multinational Telecom Investors Corp. (Multitel) of 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 put in 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.
This, as most of the pseudo-investment firms which had been apprehended by the SEC or have yet to be uncovered, appeared to have shifted to the provinces to continue their illegal activities without the prying eyes of authorities.
The SEC has also warned the public against persons or companies that represent themselves as being authorized by the SEC to accept investments or 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.