An investigation conducted by the SEC showed that Good Harvest was selling investment contracts to the public without the necessary license, in violation of the Securities Regulation Code (src).
Under the src, no securities can be sold to the public without prior registration with the SEC.
The SEC said it has received promotional materials of the company from some investors showing that Good Harvest deviated from its business model.
The scheme employed by Good Harvest includes the purchase of a mango seedling/tree on an assigned plot with a "five-income-stream" privilege which could be earned by the purchaser. The main object of the scheme is the so-called "Cooperative Referral Program" which urges the public to enter the network so as to earn a bigger income.
The issuance of the cease-and-desist (CDO) order was intended to safeguard the interests of investors, the SEC said.
"The continued offering and sale of said securities by the respondent without the requisite registration and permit may cause grave and irreparable injury and prejudice to the public. Thus, this must be restrained if only to protect the innocent investing public," the SEC said.
Covered by the CDO are the company’s officers, directors, agents, representatives, conduits and all persons acting for and in their behalf.
The SEC has directed Good Harvest to explain within five days from receipt of the order why the CDO should not be made permanent.
Pursuant to an SEC circular, Good Harvest may file a formal request for the lifting of the CDO within a non-extendible period of five days from receipt of the order. The request should also state whether the corporation is willing to enter into a settlement offer and would opt for summary procedure.