SEC, DTI team up vs illegal investment schemes

The Securities and Exchange Commission (SEC) and the Department of Trade and Industry, (DTI) are leading the government’s stepped up campaign against illegal investment solicitation activities.

Following their memorandum of agreement forged last year, the SEC and DTI are now implementing a nationwide move to educate the public on certain get-rich-quick schemes. Through the placing of posters and distribution of brochures in public areas, the SEC and DTI hope to enhance the public’s knowledge and help them in determining where to invest their hard earned savings.

In view of the difficult economic conditions, thousands of investors including OFWs and retirees have been lured into joining various investment schemes that promise instant and hefty gains in just a short period of time. More often than not, these get-rich-quick schemes turn out to be scams.

The brochures are in easy-to-read formats with more detailed information on the definition of scams, the types of scams and steps on what to do before investing and in situations where investments have been made. Contact information for the SEC and DTI are likewise indicated for those who wish to file complaints or inquiries with either of these agencies.

Supporting the SEC and DTI in their anti-scams awareness campaign are the Overseas Workers Welfare Administration (OWWA), AFP-RSBS, the Social Security System (SSS), Government Service Insurance System (GSIS), Metropolitan Bank & Trust Co., Bank of the Philippine Islands, Department of Interior and Local Government, the AFP Savings and Loan Association Inc., and the Land Bank of the Philippines.

Apart from the posters and brochures, the SEC will also be distributing its "Dos and Don’ts for Investors" pamphlets in Filipino, Ilocano and Cebuano translations. The issuance of the pamphlet is part of the SEC’s efforts to motivate the public to take personal responsibility for making investment decisions.

In the pamphlet, the SEC warns would-be investors against "inside information", hot tips, and rumors that supposedly will give them a big advantage over other, less knowledgeable investors.

The SEC said the public should also be wary of unexpected telephone calls, letters or even personal visits from people who promise hefty investment returns.

Prospective investors are encouraged to ask for a prospectus, financial statement or other similar document before they even consider investing. "Investors should make sure they understand the terms thoroughly before signing any kind of document. They should also always demand official receipts in the name of the corporations or entities they are dealing with," the SEC said.

As the country’s commodities and futures exchange remains closed, the SEC has also warned the public against engaging in foreign currency trading unless investors fully understand the mechanics or dangers of currency trading.

The SEC has likewise asked the public to avoid seminars that promise high returns with no explanation of risk, and that promise access to secret or exclusive techniques for building wealth.

In particular, the Commission said the public should be wary of schemes that are based primarily on paying commissions for recruiting new participants into the program, that promise sky-high returns in a short period of time, and that offer home investment or employment opportunities.

In the classic pyramid scheme, participants make money mostly through recruiting new members into the group. Usually, these involve selling some product or service. The underlying goods and services, which vary from vitamins to shoes, serve only to make the schemes legitimate.

SEC said all pyramid schemes collapse when they run out of people to get money from.

The Commission, however, pointed out that not all multi-level marketing schemes are illegal as long as the earnings are related to an individual’s performance as a salesperson of the products or services being marketed.

Nevertheless, investors are still encouraged to check with the DTI before getting involved in any multi-level marketing scheme.